Unveiled in March, PayPal Here consists of a free app and fully encrypted triangle-shaped thumb-sized card reader, which turns any iPhone, and soon Android handset, into a mobile payment system that customers can swipe their cards through to carry out transactions.

The system is central to PayPal's ambitions to move beyond online commerce into the high street. It also sees the company move into territory already occupied by the likes of Verifone, Intuit and Square, the Jack Dorsey-led media-darling.

In a blog post, Will Ferguson, VP, PayPal Mobile says that in the first 24 hours, the firm was signing up more than 1000 merchants an hour. The fact that unlike its rivals, PayPal Here is available outside the US has helped boost take-up, with more than 200,000 merchants in the States, Canada, Australia and Hong Kong on board within weeks.

Square, which began a mass-market roll out in late 2010 has around one million users and is processing transactions at an annualised rate of $5 billion, according to Bloomberg.

Says Ferguson: "We're shipping thousands of readers out each week and we will continue to ramp up distribution. Demand remains very strong and we still have thousands of businesses signing up every day, despite the fact we haven't even started our marketing programs yet."