You could place it only on the order checkout page with your other payment options.
Or you can have it in combination with a paypal button and/or your regular 'buy now' [directly from site] button.
It won't work for every business type and website layout, but I was thinking it would have been great for my upcomming software product site. The 'physical goods only' part killed it. But I could always just email a d/l link to the customer and also send them a cd/dvd in the mail. It's just that 1) it's going to cost me to get a professional printed dvd + material and 2) create more work for myself. It might not be worth it.
[edited by: TowerOfPower at 5:30 pm (utc) on July 29, 2008]