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PayPal’s mobile payment system has gone live at 51 Home Depot stores in the US.

The eBay-owned company has also reported that its mobile payment volume reached $4bn in 2011.

PayPal’s new mobile payment system, which was trialled by eBay CEO John Donahoe, allows users to pay at the till by entering their mobile phone number and PIN.

No bank card is needed and the customer is emailed a receipt for the goods.

blog post from eBay said the system also works using a plastic card issued by PayPal that works like a credit card.

PayPal’s mobile payment system is an interesting experiment, but one that is likely to be overshadowed by NFC technology.

Mobile phone companies and banks are pushing hard to make contactless payments the norm. Last week, Visa certified smartphones from LG, Samsung and RIM as safe to use its NFC payment system.

NFC is far simpler and quicker than PayPal’s system as you simply need to touch your card on the reader without entering any codes.

That said, NFC payments have a limit of £15 to £20 so there is potential for a mobile payment system for more expensive items.

Whether PayPal can take advantage of that market is unclear. Issuing customers who already own a Visa card with an NFC-enabled credit card is a relatively simple operation, but persuading people to fundamentally alter the way people they use PayPal by taking it offline is a much harder sell.

Also, PayPal has 106m active accounts, but there are more than 1bn Visa cardholders worldwide.

PayPal also announced that mobile payment volume reached $4bn in 2011, more than five times the volume in 2010.

Its revenue increase 28% year-on-year, and net total payment volume grew 24% to $33.4bn in Q4 compared to the same period the year before.

eBay achieved revenue of $3.4bn in Q4 2011, a 35% increase on the same period in 2010.

For the full year revenue increased 27% to $11.7bn.

David Moth

Published 19 January, 2012 by David Moth @ Econsultancy

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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