Paypal's Coinstar integration, Dan Schatt

Coinstar has built a massive business with its coin counting kiosks. But what if you could dump your loose change right into a digital wallet?

Back in May, PayPal announced that it was testing out integration with Coinstar kiosks in Dallas that would do just that. In addition to getting cash or gift cards, you can also use your change jar to refill your PayPal account. You can also withdraw money from your PayPal account, similar to an ATM.

At the time, PayPal said 40 percent of its testers returned to the CoinStar machines to add more coins to their accounts.

I stopped by eBay’s new Manhattan office yesterday to chat with PayPal’s Dan Schatt, general manager of financial innovations, and to get a first-hand look at how the new Coinstar integration works.

As you can see in the video below (edited slightly to omit my phone number), the process is fairly simple: Dump coins into the Coinstar machine, plug in the phone number tied to your PayPal account, and then wait for the kiosk to count your coins. You’ll get a paper receipt detailing the transaction, as well as a message from PayPal almost instantly.

Even though Coinstar already offers a bunch of electronic gift certificates via its kiosks, there’s more flexibility with putting change into your PayPal account. The only catch is that you’ll have to pay the typical $3 Coinstar fee to send cash to your PayPal account, while Coinstar offers electronic certificates for free.