It’s a more specific word for a mole or agent-provocateur.
Lets say Health for Peace is a protest group advocating a radically liberal health care policy, and they show up at HMO XYZ ‘s annual meeting to protest them.
Some XYZ vice president might decide that this is going to be a PR disaster, as Health for Peace is known for having non-violent, effective protest. So a month before the meeting, he quietly hires Joe The Wreck, a local thug, to infiltrate Health For Peace.
Joe the Wreck starts going to Health for Peace meetings, and is invited to the protest.
At the protest, during a lot of non-violence, he just flips the fuck out and starts throwing rocks at the police, yelling “HAVE SOME PEACE, PIG-MUFFINS!” The police fight back, things get ugly, etc, etc. Tear gas, broken bones, jail time. At the end of the day, HMO XYZ looks OK and Health For Peace looks, well, unpeaceful.
Joe the Wreck collects a cool ten thousand bucks a few days later, having successfully discredited Health for Peace and dissolved whatever PR nightmare could have existed for HMO XYZ.
But Joe is an idiot, and is followed by one of his fellow Health For Peace advocates, who photographs him getting a bucket of cash from the XYZ Vice President, and takes that photo to the NY Times. Front Page Story: “HMO XYZ Pays Mole to Incite Anti-XYZ Riot”
Now the PR disaster is even worse than the VP ever thought it could be.
That’s what a paid protestor is.
Alternate use (less common): Health for Peace realizes that only ten people are going to show up, and they will look stupid. So they literally pay people to show up and “care.” Those people being “paid protestors” is an accusation HMO XYZ might make.