Yes you can, just change the code in the file
/skin1/customer/main/checkout.tpl to the following:
Code:
{capture name=dialog}
{if $userinfo ne "" and ($userinfo.s_country ne $config.Company.location_country)}
<table border=0 align=center width=100%>
<tr>
International customers may only use Paypal and Gift Certificates as a payment options.
</tr>
</table>
{/if}
<form method=get action="cart.php" name=checkout_form>
<table border=0 align=center>
Note: The above is based on the shipping country.
Hope this helps...