So I just tried something today...
My Xbox region is set to New Zealand (because I have family there, so I am using their address). I don't know if this would work with other regions, but it did not work for me when my Xbox region was set to Singapore.
I couldn't add my credit or my PayPal account as payment methods in my Xbox, as they are identified as being in the wrong region.
So I tried the steps below and somehow it worked!
1) Used my PC to login to
https://account.microsoft.com to add PayPal as a payment option
2) Go to the Xbox Store in my Series X and searched for a game (in this case
Mafia Trilogy)
3) Checkout with PayPal as payment method and success!

Again, I am not sure if this is something that has been done before, but this is something new to me and I thought it was worth sharing.