Launched in the US last year, the original PayPal Here consisted of a free app and triangle-shaped thumb-sized card reader which turns handsets into mobile payment systems that customers can swipe their cards through to carry out transactions.

The technology has since been introduced in Canada, Australia and Japan but is not appropriate for markets, such as the UK, where EMV chip and PIN is the standard, so the eBay unit has built an alternative version of the dongle.



The system will be tested with a group of small businesses in the UK over the next few months before a commercial launch in the summer, with other European countries following.

PayPal has yet to confirm pricing; the hardware will have a "competitive purchase price" with a small fee for each transaction. In the US users are charged 2.7% of each transaction's value.

The UK launch sees PayPal steal a march on its big US rival Square, which has yet to break out of North America. However, the company still faces stiff competition in Europe, from the likes of Intuit, Payleven, mPowa and iZettle, which this week launched its own chip and PIN reader.