Change Sales Order Default Status in Magento 2 – How to Guide

Not the answer you want, but the state of orders follow a predefined flow and should not be changed. Only the custom defined status within a state can be changed by your requirements.

Aligent Consulting created a flow chart for order states:

^{Source: https://twitter.com/aligent/status/509487359172177921/photo/1}

You see that as soon as an invoice is created and the order is payed, the state is processing.

Orders are only pending if they are waiting for payment. This is actually never the case for PayPal where the payment happens instantly (there is only an intermediate status "Pending PayPal" where the order has been created in Magento and the customer has been redirected to PayPal to finish the payment.

It does not make sense to mark PayPal orders as "processing" and it will break the order flow because the assumptions Magento makes will not hold true anymore!

What you can do is create a custom order status, call it whatever you want and assign this as default status for PayPal orders. But it has to be a child of the "processing" state

Sounds like the IPN callback is not reaching your site (or working) after the upgrade.

Some things to check:

1. In paypal, what does the IPN callback history say. (in paypal, select 'History->IPN history') Any errors reported there? This may tell you where the issue is.

2. In paypal, do you have a ipn callback url set, and what is it. (not really needed, as magento passes the url, but still good to check, just in case)

ref: http://www.magentocommerce.com/wiki/3_-_store_setup_and_management/payment/paypal_standard_payments_setup_with_ipn

Starting with Magento 1.4.0.0, the ipn url is now : http://www.yoursite.com/paypal/ipn/standard/, however since 1.4.1.0 it changed again to be just http://www.yoursite.com/paypal/ipn/

Inchoo has written a great article on how to debug IPN callbacks: http://inchoo.net/ecommerce/magento/debugging-paypal-ipn-in-magento/