Is Paypal still innovating?
It depends on your definition of "innovation." Innovation takes place when new products, services, or business models are created and introduced to the marketplace. Innovation also takes place when existing products, services, and business models are improved or refined.
Has Paypal recently introduced a new innovation that will dominate some new market segment and open up new profit centers for the business? I don't personally know of any such innovation. But, it looks like Paypal is continually refining and improving, thus innovating, on their existing lines of business.
You might check out "The Innovator's Dilemma" and "The Innovator's Solution" by Clay Christensen. Those books define different types of innovation: disruptive vs. sustaining. Others have defined even more kinds of innovation. The point is that innovation happens all the time, in every part of the world, and in nearly every firm. Some innovations are noteworthy and others are not.