This question came up at session 1 of the May 2013 Websites 101 workshops: Can you use PayPal for international sales?
Yes, and you can find out more on this help page: Transaction Fees for Cross-Border Payments – United States.
Things have changed as of Aug. 11, 2013
On Nov. 20, 2013, Google Checkout is being “retired,” and if you’re selling physical objects, you’ll have to switch to another payment system. They suggest Braintree (only for United States, Canada, Australia, and Europe); Shopify (which countries they support depends on which payment “gateway,” like PayPal, you pick); and FreshBooks (again, it depends on the gateway). See Retiring Google Checkout Announcement for more information.
Amazon Payments works for your customers who are also already Amazon customers. “Amazon Payments allows U.S. as well as international customers to use major credit cards to make payments on Amazon Payments-powered websites. However, bank account and Amazon Payments account balance transfers are enabled only for US based customers [in other words, you have to be in the U.S. with a U.S. bank account to collect your money]. All transactions are in U.S. dollars.”
PayPal’s international payments are unchanged.