The PayPal InStore app, which launches tomorrow (31 May) on iPhones and Android devices, allows shoppers to use their Paypal accounts to make purchases at 230 stores across the UK.
The app issues a unique barcode and transcode number that shop assistants then scan to take money directly from an account. Refunds and discounts are also managed via the app.
No financial or personal information is stored on the app, PayPal insists the move will address concerns that contactless payments are not secure enough yet to become a popular way of purchasing goods.
Cameron McLean, managing director of PayPal UK, says the “secure” method of paying marks the start of a “quiet revolution” in the way people shop on the High Street.
He adds: “The lines between the online world and high street will soon disappear altogether: research we carried out last year amongst major retailers suggested that 2016 will be the year you won’t need a wallet to shop on the British high street. A phone will be enough.
Ish Patel, group omnichannel director at Aurora Fashions, says the smartphone deal marks the latest step in the fashion group’s bid to offer a multichannel journey to consumers.
UK retailers John Lewis and Argos are already PayPal partners, but they are not using the in-store app as yet.
The launch is expected to build on the $4bn (£2.6bn) in global mobile payments PayPal handled in 2011 and almost double to $7bn (£4.5bn) this year, according to the online business.
The deal comes as research from VoucherCodes.co.uk revealed that 60% of British adults would avoid making mobile payments. The poll of 2,000 participants identified that security concerns (36%) were the most common reason for avoiding mobile payments.
PayPal also took a swipe at NFC technology, with McLean saying it wasn’t important for mobile payments to succeed.
There are only a handful of mobile operators offering NFC-enabled devices and only a limited number of retailers such as Waitrose and McDonald’s hosting terminals in the UK. Both Blackberry and Samsung have launched services on their devices in recent months to accelerate the uptake.