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PayPal introduces hands-free payments with Beacon device

In a bid to dominate the physical retail experience, PayPal unveils a Bluetooth communicator that takes in-store payments hands-free.

Beacon connects to a customer's PayPal app when they enter a store.

PayPal unveiled another cornerstone in its vision for the future of brick-and-mortar shopping Monday with the Beacon, a low-energy Bluetooth communicator that allows customers to automatically check-in at a store, receive deals and information via notifications, and pay for products without swiping a card or pulling out their smartphone.

Speaking at TechCrunch's Disrupt 2013 conference in San Francisco, PayPal's Vice President of Global Product Hill Ferguson briefly demoed the add-on hardware device, calling it one of the shortest demo in Disrupt history.

"That's no an accident. We designed it that way," he added. The Beacon is meant to be a simple solution -- one intended to work in conjunction with its newly redesigned mobile app and any compatible Point-of-Sale system -- to the complicated issues surrounding mobile payments, a highly contested market that according to PayPal still relies on inefficient processes involving both retailers and customers.

"It turns out tapping a phone is not much better than swiping a card," Ferguson said, which is why PayPal designed its device to focus on hands-free exchanges.

For instance, a customer can arrive at a store, where the Beacon will automatically communicate with his or her smartphone to check that person in and alert them with notifications to things like daily deals.

Rounding out the system is the payment experience, which allows a retailer to process everything directly through PayPal's app without the need to swipe a card or authorize the payment through touching a smartphone. Customers simply have to tell a retailer they're paying with PayPal. Receipts are also handled electronically, eliminating the need for signatures.

It's something that competitors, like mobile payments company Square, have already introduced. But because PayPal is using Bluetooth low energy, or BTE, the battery life hurdles of letting one's smartphone communicate with a device like the Beacon are lessened.

PayPal will be bringing the Beacon to market in 2014, but it's launching today the Mobile In-Store API for retailers and developers.