PayPal and Office Depot are reportedly testing the former's new payment method, called by experts as 'wallet in the cloud', that allows consumers with PayPal account to actually make in-store purchases, reports said.

According to Reuters, the new PayPal-Office Depot partnership came following the earlier initiative by Home Depot, which has deployed the new PayPal payment system to some 50 Home Depot outlets.

Prior to the new payment method, PayPal has been confined on processing payments for online shoppers and was initially limited on accepting payments for items bought on giant auction site eBay, PayPal's parent company.

This time around, anyone with PayPal account can use a PayPal card or a mobile phone numbers to clear the check-out counters of selected retailers in the United States.

These consumers, PayPal said, will just have to key in their PINs or swipe their cards on PayPal-configured counters to complete their payments.

Reuters said that so far, only Home Depot and Office Deport have enrolled with the PayPal system, which the company unveiled in September last year and eventually plans to deploy on 20 U.S. retailers by the end of 2012.

As in the case of Home Depot, the roll out in Office Depot, according to its North American Unit President Kevin Peters, was implemented in gradual stages.

"At this point, we are walking very, very slowly. The last thing we want to do is to roll out technology that doesn't appreciably change the customer experience," Peters told Reuters.

"It's in a small number of stores ... because there are still some rough spots in that experience. There are some limitations on who can use it, service carriers that support that," the Office Depot added.

On its part, Home Depot said that PayPal's new payment system gives the retailer a platform that provides customers technological means in making their usual purchases.

"We believe PayPal's solution has the potential to improve the checkout experience as we know it today by making it fast, secure and more convenient for the customer while providing savings for Home Depot, Dwaine Kimmet of Home Depot was quoted by Reuters as saying.

PayPal has processed some $70 billion in online payment over the past seven years and by adding its presence on the traditional store setup, the company aims to secure at least two percent of in-placed POS in the near term, Reuters wrote.