Cash, Check, or PayPal?


So you're at the mall, meticulously crafting a new image at your favorite apparel store. At one point, you had to beat another shopper for the last pair of the perfect shoes in your size. Safely in the checkout line, you realize that you left your wallet in the glove compartment.

Today, that scenario is somewhere between a hassle and a nightmare. But leaving the wallet behind is getting easier to stomach, thanks to the near-field communication technology that connects your smartphone to the checkout systems with a simple tap. NFC payments rest on the idea that it's easier to grab the phone that's always by your side than first finding your wallet and then shuffling through a handful of credit cards.

Google (NAS: GOOG) already supports this alternative in the Google Wallet service, backed by a number of banks, credit card issuers, and other partners. Other smartphones are widely expected to add similar NFC-based services in 2012 or 2013.

But eBay (NAS: EBAY) wants a piece of the action, too -- without depending on any hardware at all.

The online auctioneer's PayPal arm recently launched a test program in Home Depot (NAS: HD) stores where you could either run a PayPal credit card at checkout (boo, hiss, not a revolution at all) or tap in your phone number and passcode on a terminal (the real innovation here).

Either way, your caulk tubes and mulch bags get charged to your PayPal account, as if you'd just won an eBay auction to get them. The home improvement crowd may not seem like a great demographic for this non-traditional kind of payment service, but the Home Depot test worked so well, PayPal has now rolled out the service at all 2,000 locations nationwide.

This week, PayPal added another 15 national retailers to the in-store payments program, and this time it's a more appropriately targeted bunch. The wallet-free solution will soon work at youth-oriented clothing chains American Eagle Outfitters (NYS: AEO) , Aeropostale, and Abercrombie & Fitch (NYS: ANF) , as well as hip juice-slinger Jamba Juice.

All of these chains cater to younger and more connected crowds. Customers at these retailers seem far more likely to have a PayPal account and know what to do with it than your average Home Depot shopper. And if you want proof that PayPal wants to skew young and tech-savvy, consider that leading toy store chain Toys R Us and tech outlet Tiger Direct are part of the new slate, too.

Four of the new PayPal checkout partners are also in the Google Wallet crowd, so there's nothing exclusive about either of these newfangled payment services. Spreading the love is smart: Open competition should drive faster adoption of all these technologies, since consumers don't need to pick their payment services based on what their favorite retailer happens to support.

As evidenced by the growth of NFC, financial services remains a vibrant and innovative field. In fact, some of the world's smartest investors are pouring assets into this sector right now. Find out what these geniuses are buying in our brand-new special report: "The Stocks Only the Smartest Investors Are Buying." The report is totally free, but won't be available forever, so grab your copy right now.

At the time thisarticle was published Fool contributorAnders Bylundowns shares in Google but holds no other position in any of the companies mentioned. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. The Motley Fool owns shares of Aeropostale and Google.Motley Fool newsletter serviceshave recommended buying shares of eBay, The Home Depot, and Google. The Motley Fool has adisclosure policy.We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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