PayPal Inc. is testing a cell phone payment service that could bring some features of online advertising and shopping to the offline world.
Amanda Pires, a spokeswoman for the San Jose unit of the online auction giant eBay Inc., said its employees began Wednesday to test the PayPal Mobile service, which allows consumers to exchange money with one another by exchanging phone numbers.
The service's biggest benefit could be for merchants.
In online advertising, consumers can buy the advertised products and services immediately with little effort. The process is even faster if the merchant has dealt with the consumer before and has the shipping and payment information on file.
PayPal aims to duplicate this process offline, and to make merchants' online sales to new customers just as seamless, Ms. Pires said.
The payment processor has more than 100 million accounts, 28.1 million of which were used during the fourth quarter.
"All these people have already trusted us with their personal financial information and their shipping address," so PayPal has all the information it needs to complete any orders for a product this way, Ms. Pires said.
A variety of companies are showing renewed interest in using cell telephones as transactional tools, though the efforts typically involve adding technology to phones rather than building on existing phone services.
In December, JPMorgan Chase & Co. and Visa U.S.A. began a six-month test of phones that use a contactless chip to transmit payment information. Morgan Stanley's Discover Financial Services announced similar plans at that time. Both of the services work only with phones that use Cingular Wireless LLC's network.
Merchants that accept payments through PayPal Mobile would use unique codes for the things they sell. They could put those codes in any advertisement, including billboards or newspaper ads, and consumers would use those codes in a text message or phone call to PayPal, which would call the consumer and request a personal identification number to authorize the payment. The merchant would then use the consumer's address on file with PayPal to deliver the product.
Ms. Pires would not say how much PayPal plans to charge merchants for its service. "They need to work with us to get integrated," she said, and that process is "not long."
She also would not say whether this service would be merged with any products or services PayPal already offers to merchants.
Merchants that use PayPal Mobile could "directly understand how effective advertising was" by studying how many purchases were made from the code used in an ad, she said. The data is similar what merchants generate when they track click-throughs from online ads, she said.
To use PayPal Mobile for person-to-person payments, consumers would type in a recipient's phone number instead of a merchant code, Ms. Pires said. The payment would be authorized by a PIN.
The service will be offered in a few weeks to consumers and merchants in the United States, Canada, and the United Kingdom, she said. PayPal's online payment service can be used in more than 55 countries.
Aaron McPherson, a research manager for payments at Financial Insights Inc., a Framingham, Mass., research unit of International Data Group Inc., said PayPal is not the first company to try this idea.
Vayusa Inc. of Waltham, Mass., has a payment service in the Boston area in which a cell phone is used at the point of sale as if it were a credit or debit card; the charge is deducted from a prepaid account or sent to a linked credit or debit card.
That service has not really taken off, Mr. McPherson said. Taking the idea and "merging it with PayPal would give it a better chance of being adopted, because more people could use the service." PayPal "has the advantage because it has 100 million accounts."
However, PayPal still may have trouble persuading consumers to use PayPal Mobile, he said. "The problem with cell phone payments is, why don't you just call … [the merchants] up and give them a card number?"
