Online payment processing firm PayPal has introduced another of its over-the-counter payment scheme, this time around through the use of the now ubiquitous smartphones.

The new system is called 'PayPal Here', according to PayPal mobile vice president David Marcus, who unveiled the fresh cutting-edge service on Thursday in San Francisco, California.

With the new payment method, Marcus said in a press briefing that "no business will ever have to say they can't accept a form of payment."

"We are going to aggressively push this out to our 100 million PayPal users around the world ... We can accept any form of payment, short of barter," the PayPal executive was quoted by Agence France Presse (AFP) as saying.

Also, eBay Chief Executive John Donahoe called the new payment service as the fusion of traditional retail functions with that of technology, promising too that more breakthroughs bringing together the two sectors would be unveiled soon.

PayPal is owned and operated by eBay.

"The intersection of technology and traditional retail is having a bigger impact on shopping than at any point in history," Mr Donahoe told reporters during the PayPal Here launch.

According to PayPal, merchants using the new service yield only 2.7 percent from every sales transaction, which could be whittled to 1.7 percent if purchases will be processed through PayPal's business debit cards.

PayPal Here plug-ins and accompanying software have been deployed for sellers and consumers to avail of the system, which the company said would be initially available via iTunes for free.

Meaning only iPhone owners can use the service for now but PayPal has promised that an Android version will be released soon.

The plug-in comes in the form of a triangle-shaped dongle card reader that allows buyers to connect the device to their mobile phones and make their payment using the set-up while merchants can use the service app to take a picture of the payment card data, again using a smartphone, PayPal said.

The system is also armed with built-in prompts that would alert consumers of participating sellers, who in turn will be advised that likely customers were within radar, the company added.

PayPal hopes to lure small businesses and individual entrepreneurs into using the payment service, which provides credit card payment facilities minus the set-up costs.

According to AFP, PayPal's new service comes in direct collision with Square, a similar payment method established in 2010 by Twitter co-founder Jack Dorsey.

Square presently counts some 750,000 sellers under its wings and has so far processed $2 billion worth of yearly transactions since it was started by Mr Dorsey, also in San Franciso,

Plans to expand have been underway, AFP wrote, with payment processing beyond the United States set to be launched later this year.