PayPal’s new service will compete with similar services offered by iZettle and Payleven in the UK.
PayPal has introduced a European version of its PayPal Here mobile payments service in the UK. The service will provide new sales methods to small merchants that earlier relied on cash or cheques.
As part of the move, the company has also unveiled a Chip & PIN device which would allow small merchants to accept credit and debit cards as well as PayPal payments.
Paypal president, David Marcus, said that the company mainly targets small businesses.
"They are the core of Paypal's business and they've told us that they want a simple, secure way to take card payments anytime and anywhere they trade," Marcus said.
The new service will be available to selected UK businesses over the next few months prior to the complete launch of service in the UK by summer 2013.
PayPal will be competing against similar offerings from iZettle and Payleven.