The service, called PayPal Here, lets merchants receive payments via an app on their smartphones from customers’ credit and debt cards, or their PayPal account.

Customers insert their cards into a remote terminal, enter their pin number, confirm the payment amount and then the merchant either emails or texts the receipt back to them (see video below).

The service is primarily aimed at the SME sector and poised to launch in the UK later this year. PayPal, a subsidiary of eBay, will charge merchants an as yet undisclosed amount for the terminals and will collect a small fee from every transaction.

Banks, payment providers, retailers and the mobile industry have made recent moves to popularise the behaviour.

Last week Visa UK’s MD Marc O’Brien revealed the company’s plans for a pan-European “mainstream launch” of contactless and mobile payments this year adding that it has received backing from high street retailers like M&S and Transport for London (TfL).

Foremost among these efforts are plans to introduce smartphone payments using NFC technology and Visa is currently in talks with O2-parent Telefonica and Vodafone plus a host of device manufacturers to accelerate such a roll out.

Orange and Barclaycard launched Quicktap, the UK’s first mobile payments service using NFC, in May 2011 allowing users to make payments via their mobile phones for purchases under £15 at outlets such as Eat, Pret A Manger and Subway.