The equality $pAp=\mathbb Cp$ would occur if $p$ was a minimal projection in $A$, which is not the case here. The hypothesis is that $p$ is minimal in the centre of $A$.
Note that $Z(A)=Z(A')$. The centre of $pAp=Ap$ is, since $p\in A\cap A'$, $$ Ap\cap(Ap)'=Ap\cap A'p=(A\cap A')p=Z(A)p=\mathbb Cp, $$ since $p$ is minimal in $Z(A)$. So $pAp=Ap$ is a factor.