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PayPal preparing to expand its digital wallet service to 2,000 Home Depot stores this spring

by Phil Hornshaw

Online payment service PayPal is continuing to try out its new mobile payment capabilities, expanding its testing grounds to 2,000 Home Depot stores.

PayPal, the eBay-owned online payment company that offers mobile apps on Google’s Android operating system and Apple’s iOS platform, revealed that it was testing a “mobile wallet” service earlier this month. Similar to other payment services that utilize smartphone apps, like Google Wallet, PayPal’s service would allow users to use their smartphones’ screens in place of a credit card or other payment method. By scanning a barcode, users could make payments at Home Depot stores using their PayPal accounts.

The new service was being tested by PayPal employees in January, using Android and iOS apps as well as a “PayPal card” that would replace a credit card. According to a story from Bloomberg, PayPal is now looking to further expand that service beyond just internal testing. PayPal plans to expand the service to 2,000 PayPal stores by March this year, hoping to pull customers away from using credit cards and toward using its service.

Bloomberg says PayPal kicked the payment service over to public testing last week, expanding it to 51 Home Depot stores in the San Francisco area. The company, which is the fastest-growing arm of eBay, doesn’t expect the in-store payment system to have much effect on its bottom line anytime soon, even with the expansion to other stores. But in three to five years, PayPal expects a lot more people will be willing to use their phones and PayPal service in stores, and that’s when the initiative will be substantial.

eBay and PayPal intend to expand the service beyond Home Depot before long, as well, and have plans to make it available with 20 other retail partners by the end of the year. Bloomberg also reports that eBay has created a larger “mobile wallet” app that allows users to store their payment information, including credit and debit cards as well as PayPal. Using that app, you’ll be able to choose which payment form you want to use on a transaction and wait as long as 30 days after the sale to decide, as well.

Just when all these new mobile payment capabilities will be available, eBay hasn’t said outright. It seems fair to expect to at least sample what PayPal and eBay have to offer in a store near you by the end of 2012, however. Along with other mobile payment possibilities, like Google Wallet and near-field communication technology, smartphones could play a big role in changing how we buy things in stores this year.