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Barclaycard And Ebay Pledge 'Mobile Wallets'

(c) Sky News 2012

The evolution of smartphones into 'mobile wallets' has gathered pace after both Barclaycard and Ebay (NasdaqGS: EBAY - news) announced new ways of making payments.

Barclaycard Visa is to introduce a mini stick-on credit card that can be attached to the back of a mobile phone and held against a reader, allowing for 'contactless payments'

The free Barclaycard PayTag can be fixed to the back of any mobile phone and is around a third of the size of a normal card.

The phone can then be used to make payments of £15 and under, rising to £20 in June, by being held over a payment terminal, without the need to sign or enter a PIN.

Barclaycard said it plans to roll out the scheme later this year, saying that it will reach "millions" of customers.

Major retailers which offer or are introducing contactless payments include Waitrose, McDonald's, Boots, WH Smith (Other OTC: WHTPF.PK - news) and Tesco (LSE: TSCO.L - news) .

Barclaycard dismissed concerns about the security of contactless bank cards, insisting they are "safe and secure".

Louise Holmes, spokeswoman for comparison website Moneyfacts, described the scheme as "an exciting, innovative way for cardholders to conduct transactions".

She (SNP: ^SHEY - news) said: "Millions of us carry mobile phones nowadays, so using our phones as a method of payment should prove popular with many consumers."

Meanwhile, online auctioneer eBay has promised to "define the future of money" by using its PayPal service to replace credit cards and cash by making smartphones into "mobile wallets".

The promise from the online firm's chief executive, John Donahoe, comes as it revealed a 32% growth in PayPal revenue for the first quarter of 2012.

"PayPal mobile payment volumes continue to be on fire," Mr Donahoe said.

"We see enormous opportunity for PayPal online, on mobile devices and increasingly, in the offline environment as well."

According to the Financial Times, eBay's strategy is to lead the new race for mobile payments to thwart both large competitors and innovative start-up firms, as people move away from plastic.

Since early 2012 it has expanded a roll-out of payment capabilities at a large US DIY and furnishing chain so customers can pay simply by giving checkout staff their mobile phone number and a Pin code.

Mr Donahoe said payment facilities were being expanded with other large retailers, along with the development of smartphone apps to replace credit card readers in smaller businesses.

He also said emerging markets around the world, where limited e-commerce facilities exists, were also ripe for expansion.

Meanwhile in the US, eBay has continued to experiment with television shopping, where users enter the programme they are watching into their smartphones or tablets, which then display merchandise linked to the show.

:: Ebay said its first-quarter profit was $725m (£450m) and revenue was $3.3bn (£2bn), up 29% from the same period in 2011. However, its core online auction and classified business saw only modest growth, with revenues up 11% to $1.7bn (£1bn).