@bugaonz - yes generally (if not set up), IPN won't be able to communicate with your local setup on your local computer. However there are ways to make it work which I won't get into here. You can read some articles on how to get this to work but it takes some bit of knowledge with server side administration. If you do a search on Google for "paypal ipn on localhost", you will find many articles on how to get this to work.
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