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One of the best-known online payment processors in the world recently made the decision that it would not focus on developing a tap-to-pay service for mobile phones, and would instead focus on expanding itself into the world of brick-and-mortar retail.

PayPal, the online payment processor owned by eBay, recently announced plans to start edging itself into real-world purchasing by striking a deal to become a payment option at the Home Depot, and the rollout is happening quickly. Already, PayPal is accepted as a payment option in 51 of the national hardware chain’s retail locations, and will be in all of them by the end of February. In addition, there are plans from the payment processor to make itself a purchasing option in as many as 20 national retail chains by the end of the year.

The system will work like any other payment option that’s not cash. Instead of tapping “credit” or “debit” on the little touchpad at checkout as they normally would, shoppers will be able to select “PayPal.” As long as they have a pre-existing account linked to their cellphone, they would simply need to enter their phone number and a PIN code to verify the purchase, and the receipt would be sent to them digitally through their PayPal account. In addition, users who don’t want to link their accounts with their phones will instead be issued a card that looks like a debit or credit card but is only connected to PayPal.

The incentive for businesses to add PayPal as a payment option comes in the form of customer data compiled by the payment processor, including locations of transactions, product searches and even purchase history. All this can be used to create more effective marketing for stores.

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In addition to this move, it was recently revealed PayPal is ditching its pursuit of a digital payment service that allows consumers to link their credit, debit or PayPal accounts to a smartphone enabled with near-field communications technology. That’s because it believes consumers will soon have options to pay in ways other than standard point-of-sale checkouts. While experts believe this payment method will become popular in the next few years, some believe technology may outstrip its usefulness before widespread adoption catches on with consumers.

Image: JoeInSouthernCA, via Flickr.com

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