The PayPal Mobile service, which was launched in the US last month, enables customers to make purchases and transfer funds using SMS text messages.

A 'Text to Buy' service also allows customers to purchase advertised items by sending a text message containing a product code located in an advert. PayPal's automated system then phones the user, prompting them to enter their PIN codes to verify their identity and the transaction. Payment is sent from the user's PayPal account to the retailer. Items will be delivered to home addresses already saved in the buyers' PayPal accounts.

PayPal says customers will also be able to use the m-payments service to donate money to charities instantaneously.

Geoff Iddison, chief executive of PayPal Europe, says the mobile payments service is the first to be launched by a major consumer financial services business that is starting out with an established user-base.

"The system will kick-start mobile payments in the UK and globally, and revolutionise the way people pay, as well as how companies can track advertising effectiveness," says Iddison. "From a business point-of-view, merchants will be able to use PayPal Mobile to receive payments directly from users 'off the page' – including offers in their advertising and online."