Valid in 230 stores across the UK, including high street favourites Coast, Oasis, Warehouse and Karen Millen, the app generates a unique bar code that charges your PayPal account when it is scanned by a cashier.
PayPal inStore claims to work even where there is no mobile network or wifi coverage.
The step into mobile payments will not come as a surprise. After PayPal’s former boss Scott Thompson moved to Yahoo earlier this year, the eBay subsidiary appointed David Marcus its new chief executive.
Marcus founded Zong – the mobile payments company eBay acquired last summer when Zong became PayPal’s vice president of mobile.
PayPal inStore is the latest in a string of offerings in the mobile payments market and the company claims it is better than the rival “wave and pay” service currently offered on certain credit cards and select Orange handsets, which only process transactions up to £20.
But critics have panned the app for being more complicated and time consuming than paying via cash or chip and pin.
Cameron McLean, managing director of PayPal UK, said the app “marks the start of a quiet revolution in the way we shop on the high street. We’ve created a simple, secure way to use a mobile phone to pay in your favourite stores.”