The latest version of the app introduced a feature that lets users make payments by bumping handsets together and also includes tools for splitting restaurant cheques, collecting money for events, setting reminders for recurring payments, donating and managing PayPal accounts.
The rapid adoption of the app has been helped by its support for 15 languages, taking advantage of PayPal's reach into 190 countries and 24 currencies around the world.
Osama Bedier, VP, platform and emerging technology, PayPal, says: "With PayPal Mobile on the iPhone, trips to the ATM are a thing of the past. One million downloads shows just how ready people are to live a cashless and card-free culture with their wallet living safely in the cloud."
In the UK, PayPal is currently sitting on top of the free finance apps chart, ahead of NatWest, RBS, Bloomberg, Spendometer and ATM Hunter.