Mobile network Vodafone has teamed up with online payments business PayPal to allow UK customers to make contactless payments in shops, restaurants and on transport services with their Android smartphones funded from their PayPal accounts.

From this week, customers can link their PayPal account to Vodafone Pay, and purchase goods up to the value of £30 using NFC technology.

The service will be available to use in 400,000 places across the UK where contactless payments are accepted. Vodafone Pay customers will also be able to use the service to pay for travel across the Transport for London (TfL) network as well as on National Rail services in and around London where contactless and Oyster cards are accepted.

Users wishing to spend more than £30 via this mobile payment method can do so at participating retailers through the use of a PIN. 

Another feature of Vodafone Pay means it can be used even when the phone is switched off or out of battery life because the contactless SIM can contact automatically to the payment terminal. Contactless SIM cards can be ordered from Vodafone, and they are compatible with more than 100 Android handsets available on the UK market.

In addition to using their PayPal account, Vodafone customers can now add their Visa and Mastercard bank credit and debit cards to Vodafone Pay so they do not have to carry plastic cards.

Vodafone UK's head of consumer services, Kate Wright, said the company's customers had requested use of PayPal on Vodafone Pay. 

"The service also works with any Visa and Mastercard credit or debit card offering customers greater choice than any other mobile payment service," she added.

Rob Harper, director of mobile commerce, at PayPal UK, commented: "Money is going digital, and the smartphone is at the centre of this transformation."

The mobile payments battle in the UK has intensified in the last 12 months with Android Pay launching in the spring to rival Apple Pay, which arrived in summer 2015. Samsung Pay is due to be unveiled in the UK early next year, while Mastercard recently acquired ATM and payments network provider Vocalink, which owns pay-straight-from-bank-via-app solution, Zapp.

PayPal has established itself as one of the most popular online payment methods in recent years, but it is making a strong play to stay relevant among consumers as mobile payments continue to grow in usage. As part of the Vodafone agreement, anyone who does not have a PayPal account will be able to sign up for one directly from within Vodafone Pay. 

Vodafone Pay, meanwhile, is part of the Vodafone Wallet app, where users can add and keep electronic copies of their store loyalty cards, coupons and vouchers, which can be redeemed at the point of sale.

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Vodafone Pay

PayPal