PayPal has signed deals with four major UK high street retailers to enable PayPal account holders  to make in-store payments using their mobile phones. The new service will launch tomorrow for Apple iOS and Android devices. The PayPal InStore App can be used in 230 Coast, Oasis, Warehouse and Karen Millen stores.

Customers just download the App, link it to their PayPal account and set up a PIN for security. In store, the App generates a unique barcode and transaction number, which the shop cashier scans to take payment from the customer's PayPal account, as shown below :

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The big problem with payments in stores by mobile phones and contactless cards is that there are few terminals that have the contactless technology to take the payments. This shown by the massive publicity given to the UK's Post Office when they decided to roll out contactless payment terminals to all their counter positions. This solution from PayPal avoids waiting for the new terminals. It uses something that is already there in many, many stores: the barcode reader. Maybe other payment systems will use this approach as well?