PayPal introduced new hardware last month that would allow customers to pay for items without even taking out their phones, similar to how Square's merchant app works.
Now, PayPal has taken another page out of its competitor's book -- the PayPal app will generate a payment QR code that any business with a scanner or PIN code machine can accept.
The company, which announced the feature Tuesday, plans to roll it out globally early next year.
Don Kingsborough, vice president of retail and prepaid products at PayPal, said that this is something PayPal has "researched for a long time" and that he believes it's the fastest way to get consumers to adopt mobile payment technology. He said consumers know how to use the technology, thanks to existing apps like Starbuck's, which can be powered by any mobile payment app, including PayPal.
"They've been to a Starbucks and they've seen how it works...so many people have been habituated to this action already," he said.
Conveniently, Square's partnership with coffee giant Starbucks has already promoted this type of tech to early adopter customers.
PayPal's goals go beyond one chain. The company has been testing the feature in Australia and Kingsborough said the codes will be as easy for merchants to adopt as scanning coupons. There are already "millions" of barcode scanners and more than 40 million payment PIN pads in stores around the world, according to PayPal.
When a customer checks into a store with the PayPal app, the app will generate a QR code that acts as an individual signature. Merchants can scan the code with a scanner and the payment will go through. If the merchant doesn't have a scanner, there will also be a 4-digit payment code that customers can enter into a PIN pad instead.
Kingsborough said the process is "highly secure," because the codes expire.
"If you went next door 30 seconds later, you would get a different four-digit code," he said.
The process lets PayPal offer merchants a way to take mobile payments without investing in new hardware, which in turn gives customers more shopping options. It's something the company has been racing to achieve. So far, it's done this through partnerships with big retail chains and other retail platforms like Eat24 and NCR. Combined with the recently unveiled Beacon -- a piece of hardware that automatically detects a customer's PayPal mobile app -- the company is trying to cover all its bases in an attempt to grow its app's userbase.
"These are the building blocks that allow you to build commerce at speed that consumers want to adopt and the way that they naturally progress, and the way that they want to use their mobile phones," Kingsborough.
Correction at 7:26 a.m. PT: Don Kingsborough's first quote was specifically referencing Starbuck's app.