PayPal has announced that its UK customers will now be able to use their smartphones to pay for goods on the high street.

The PayPal inStore app can be used at stores owned by the Aurora Fashions group, which include Coast, Oasis, Warehouse and Karen Millen.

Available on Android and iOS, the app gives PayPal a huge head start on its rivals in the mobile payment industry.

As previously reported, NFC is the technology that most people assume will eventually become the standard for mobile payments and Visa is planning a limited trial during the London Olympics.

However, security concerns among consumers and limited availability of NFC enabled smartphones remain barriers to widespread adoption.

PayPal’s app wil face similar concerns, but the tie in with well-known high street stores should enable it to gain traction with consumers.

Also, a lot of people will already recognise and trust the PayPal brand having used it online.

No financial data is actually stored in the app and if a user enters their PIN incorrectly three times then their account is automatically terminated.

PayPal inStore works in a similar way to Starbucks’ loyalty card app.

The customer enters a PIN to open the app where they are presented with a unique barcode and transaction number.

The cashier then scans the barcode and the payment is automatically deducted from the customer’s PayPal account.

It even works when there is no Wi-Fi or 3G access, as the app stores multiple codes for use when offline.

From Aurora Fashion’s perspective, the app may offer the chance to improve their multichannel marketing.

Mobile is a key tool for creating a single customer view, as it can enable retailers to gather data on their customers while they are in-store.

Furthermore, Aurora will be able to drive loyalty and improve sales by targeting customers with specific deals based on their demographic profiles.

PayPal inStore allows customers to sign up to offers within the app and any discounts are then deducted at the till.