PayPal intends to take its credit card processing service into the offline marketplace, thanks to a revision to its popular smartphone application. Merchants, many of whom may already use PayPal to accept credit cards online, can opt in to a new "local payments" service that leverages new mobile technology. To authorize a payment, customers can "bump" an enabled smartphone against a register's receiver, or they can "wave" a phone with an attached smart chip.

According to a TechCrunch report, PayPal president Scott Thompson intends for his company's mobile device application to connect local merchants to customers who prefer to pay with a bump or a wave of their phone instead of a traditional credit card. Advocates for mobile payment technology tout the security of a system that stores real credit card numbers and bank account details on remote servers. Security teams can disable phones and tags remotely when stolen, resulting in much less hassle than replacing a lost credit card.

Merchants, already reluctant to install yet another payment processing device at their point of sale counters, may think twice about the promotional benefits involved in PayPal's new local payments system. The PayPal mobile application can steer customers past competitors directly to a participating merchant.

About the Author


Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.