Orders placement using Paypal button does not work as expected

Preconditions: setup YC environment with MySQL and PayPal (sandbox account is used while testing) payment gateway and import icecat catalog data;

1. Create a user with shipping address and login to YC shop;
2. Put any products to your basket;
3. Go to your cart and click checkout;
4. Select a shipping address and go shipping method selection;
5. Select a shipping method and go to payment selection;
6. Select to pay using Paypal Button and click on "Buy Now";
7. Login to sandbox paypal account, pay and after a successful payment click to navigate back to store;
8. YC notifies that order placed successfully.

Expected result: Order is placed and can be reviewed in "My orders". Also, admin can approve an order and start shipping.

Actual result: Order does not appear in "My orders" section. Admin can find an order, but no action can be processed as payment does no exist for an order (Payment status: none).

This is screenshot how order entry looks in admin: http://s18.postimg.org/w42r69zmx/orders.jpg