In a boost to PayPal’s mobile payments strategy, 15 new national retailers will be implementing PayPal at the point-of-sale, enabling customers to use their mobile phones to pay for purchases.

Home Depot has been piloting the PayPal POS solution for several months and now retailers such as Abercrombie & Fitch, Footlocker, Jamba Juice, JCPenney and others are also joining in. At the same time that PayPal revealed the new retail relationships, it also announced a series of other partnerships that will see its digital wallet integrated into a wide array of POS terminals.

“We’ve seen tremendous growth in our mobile payments business since we entered the space in 2006,” said Anuj Nayar, senior director of global communications at PayPal, San Jose, CA. “Last year we handled $4 billion in total mobile payments volume and expect to exceed $7 billion in 2012.

“These partnerships are an important step in the growth of our mobile payments businesses,” he said.

“The big news is that we’ve made several important partnerships to expand our mobile payment solutions. Most importantly, our partnerships with mid-market point-of-sale management providers – Erply, Leapset, Shopkeep and VEND – will enable us to help any of their combined 50,000 merchants take advantage of new technologies through PayPal while supporting their investment in their existing POS systems.”

PayPal’s reach extended
The full list of retailers that will begin PayPal payments in-store includes Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters’, Barnes & Noble, Foot Locker, Guitar Center, Jamba Juice, JCPenney, Jos. A. Bank, Nine West, Office Depot, Rooms To Go, Tiger Direct and Toys ‘R’ Us.

PayPal, which expects to exceed $7 billion in mobile payment volume this year, also announced relationships with POS software providers Leapset, ShopKeep, Vend and Erply that will enable 50,000 business with multiple retail locations and sophisticated payment and inventory management systems to use PayPal in their stores without having to upgrade their existing systems.

Already, some of these merchants are using PayPal’s local feature, enabling customers to alert the merchant that they are in the store and shopping.

Additionally, PayPal is teaming up with POS terminal manufacturers VeriFone and Equinox  to integrate PayPal functionality into their payment terminals. This follows a similar agreement with POS terminal manufacturer Ingenico earlier this year.

Together, these three deals give PayPal access to nearly 40 million payment terminals worldwide.

The news suggests merchants are eager to begin taking advantage of mobile payments but do not want to have to wait for NFC to be more widely available or to have to invest in the necessary hardware to enable tap-and-go payments.

Isis recently announced the first retail partnerships for its NFC-enabled mobile wallet, which will be piloted in Austin, TX, and Salt Lake City beginning this summer. Google also continues to add retailers.

However, both are hampered by the limited number of handsets in the market with NFC capabilities.

Cloud-based vs. NFC
PayPal’s digital wallet is a cloud-based solution that enables customers to pay either by keying in their mobile phone number and a PIN at check-out and have the purchase charged to their wireless account bill or they can pay via a PayPal-issued credit card that connects with their phone account.

PayPal offers an alternative to NFC-based mobile wallets that can be easily integrated into many retailers’ existing POS hardware. Because it is a cloud-based solution, the account information is not stored on the phone.

Home Depot went from a five-store pilot test with PayPal earlier this year to a full roll out to its nearly 2,000 locations a couple months later.

On the user’s side, PayPal is able to send relevant offers, coupons and discounts from a retailer to keep them coming back to the store.

The news follows other advances in digital payments by PayPal, including the launch of PayPal Here, a new service retailer for smaller retailers that equips them with a mobile attachment for processing credit card transactions in store.

While PayPal’s news represents a significant step forward in its mobile payments play, the challenge for cloud-based solutions such as PayPal as well as NFC-enabled mobile wallets face is bringing enough consumers on board for a meaningful reach. To achieve scale, these experiences have to be convenient, easy and worthwhile from the standpoint of having enough participating merchants.

“With increasingly present online shopping technology it’s becoming harder and harder for small-to-mid sized businesses to keep up with the pace of consumer change,” Mr. Nayar said. “Only PayPal offers a comprehensive suite of payment solutions to help online, offline, and multichannel businesses succeed in a rapidly changing marketplace.

“With PayPal, retailers don’t need to rip and replace, install NFC or conduct a massive upgrade to bring innovation to their customers. PayPal works seamlessly with a retailer’s existing point of sale hardware,” he said.

“This simple integration allows consumers to pay quickly, easily and securely.”