In a move that merges traditional card payments with mobile, VeriFone is integrating its Payware system for the iPhone with PayPal's merchant acceptance application.
Payware Mobile consists of an app and physical sleeve for iPhones, turning the handsets into a card present point-of-sale device.
The partnership sees this sleeve integrated with PayPal payments. In addition, PayPal's application has been updated to support traditional card-based payments using VeriFone's Payware Mobile card encryption.
The Payware Mobile App will also be upgraded to support PayPal Bump, which lets iPhone users bump their handsets together to transfer money between them.
The new integrated capabilities are expected to be ready next year and the pair have also agreed to promote each other's offerings to their users.
Osama Bedier, VP, platform, mobile and new ventures, PayPal, says: "Online and offline are quickly converging and, with this new business relationship, both merchants and consumers will benefit, upon integration, from the ability to use the mobile wallet anytime, anywhere."
The PayPal tie-up sees VeriFone gain another advantage over much-hyped rival Square in the phone-as-payment-card-reader market. Over the summer, Square founder Jack Dorsey was forced to delay shipping the product because of emerging fraud concerns, admitting parts were released "before they were fully baked".