PayPal's new Payment Code technology (Photo: PayPal)
SAN FRANCISCO (USA TODAY) -- PayPal unveiled its latest technology to make paying in stores with a smartphone as smooth as swiping a credit card.
The payment division of eBay launched Payment Code Tuesday during the Money 2020 industry conference in Las Vegas.
The new technology lets shoppers open the PayPal app, or a merchant's own app, on their smartphone to check in at stores. When they are ready to pay, a QR code, or a four-digit number pops up on the phone. The merchant either scans the QR code, or the shopper types in the four-digit number into existing card swiping terminals, to complete the purchase.
PayPal has been trying to expand from its online roots into physical stores for about two years. The effort is technically difficult and puts the company into competition with payment giants, such as Visa and MasterCard, which argue that swiping cards is so easy that new ways to pay may not be needed.
However, PayPal has been plugging relentlessly away because it reckons that once it gets the foundations of its in-store payment network in place, users will be lured by other benefits, such as automatic redemption of special offers, gift cards and rewards programs that are stored in their PayPal mobile wallets.
PayPal has struck in-store deals with several big retailers, including Home Depot, and tied up with the existing network of payment processor Discover Financial Services to get into millions more locations.
"Now that we're a real payment network that consumers can use, we can introduce products that operate on this foundation," said Don Kingsborough, the executive leading the company's physical store expansion.
Earlier this year, PayPal rolled out a new mobile app that sends consumers offers from retailers based on where they are located. More recently, it unveiled Beacon, a gadget that automatically identifies PayPal users through the mobile app when they walk into stores.
Payment Code is the third part of the puzzle that will let PayPal users pay with their phones easily, Kingsborough said.
The four-digit number will be the dominant way to complete these mobile payments because there are so many card swipe number pads already installed in stores, Kingsborough added.
"We have closed the loop, allowing all this to happen in millions of locations where the consumer already shops," he added.