PayPal goes mobile with payment service

EBay’s online processing unit PayPal is rolling out a new service that allows customers in the U.S. and Canada to use mobile phones and other wireless devices to pay for products and services.

The new PayPal Mobile service, announced Thursday, will be demonstrated at the CTIA Wireless trade show in Las Vegas.

The announcement comes as numerous handset makers and operators introduce devices and services for making mobile electronic payments. On Tuesday, for example, Japanese mobile phone operator NTT DoCoMo Inc. launched its DCMX mobile payment service.

To use the PayPal Mobile service, consumers must first open a PayPal account and then log in to the account on a mobile phone. After registering their mobile phone number, they must choose a secure PIN (Personal Identification Number), used to protect payments, it said.

Users make payments by sending a text message to PayPal, which calls them back to confirm the mobile payment and then sends the money to the recipient. The service also allows them to buy goods and services, such as CDs, DVDs and tickets by sending product codes via text message, PayPal said.

PayPal has already signed up several companies that will offer “text to buy” codes, including MTV Networks, the NBA Store and 20th Century Fox Home Entertainment Inc.

“The payment issue has to be solved if mobile commerce is truly going to take off, and I’m talking about the capability for people to buy real stuff,” PayPal President Jeff Jordan said in a keynote address at CTIA. “M-commerce needs the same thing e-commerce did: a safe, simple, inexpensive way to send payments.”

The new payment system harkens back to PayPal’s founding in 1998 with the vision of offering a wireless system for making payments between Palm Pilots, Jordan said. The company dropped that concept as less convenient than using cash and then hit upon the idea of payment over the Internet. It now has about 100 million account members worldwide and is available in 55 markets, he said.

“This is back to the future for PayPal,” Jordan said.

In addition to “text-to-buy” purchases, PayPal Mobile can be used to send money to friends, by using their cell phone numbers, and to donate to charities. The technology will allow mobile subscribers to make donations at the time and place where they are most motivated, such as at charity events, Jordan said. PayPal has deals with UNICEF, Amnesty International, the Magic Johnson Foundation and other organizations for mobile contributions.