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SAN FRANCISCO — PayPal announced a new device called Beacon today that enables people to pay for products in physical retail stores using their mobile phones.

Beacon uses Low Energy Bluetooth (LEB) to transmit information from retailers to consumers and vice versa. Beacon can automatically check people in when they arrive to a retail location and deliver them product offers. The customer can then shop as normal and check themselves out via the PayPal app.

“Over the last 50 years, payment methods have evolved slowly, and NFC technology in the phone is not that much different than swiping a card. ” PayPal’s VP of global product Hill Ferguson said during a presentation at TechCrunch Disrupt. “Beacon removes even more friction. There is no swipe or tap. You can pay with your identity, instead of paying with card or cash.”

Beacon rolls out in 2014.

PayPal launched its new iPhone and Android apps last week that offer what it claims are innovative features, such as the capability to order and pay for something before you even step foot in a store as well as pay right at the table in some restaurants.

Beacon takes that a step further by automatically connecting the buyer and seller. Ferguson said Beacon uses less battery than GPS and does not require Internet. He also said privacy and security are important parts of this, and customers have control over when and where Beacon checks them in.

PayPal did a deal with point-of-sale giant NCR, which means it can tap into NCR’s technology in thousands of restaurants and enable mobile payments without forming direct partnership– a significant challenge for many other mobile payment startups.

Mobile payments is a hot and competitive sector, and a number of companies are making plays, including Square, Clinkle, and digital wallets from the likes of Google and MasterCard. PayPal’s mobile wallet had gained more traction than competitors, partially due to its massive user base.

While PayPal is the dominant payment company, it has received some flak for subpar customer service. Over the past year and a half, PayPal has made an aggressive effort to keep ahead of competitors and released a wide range if products that bring the online and offline world of commerce together.

Ferguson called on the developer community to continue this innovation with Beacon.

“The beginning of a transaction starts with beacon, with a contextual alert that lets you know there is something good there,” he said. “The end is payment, hopefully with PayPal. The middle, all that whitespace, is for the developer community to work on.”

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