PayPal to increase marketing this year for offline push

"You'll start seeing us amping marketing up later this year," Marcus said in an interview with Reuters.

PayPal is trying to become a common way of paying in physical stores, a much larger market than its online roots. The company expects to be in 2 million merchant locations by the end of 2013 and it is working on ways to persuade consumers to use PayPal rather than their usual credit and debit cards.

Customers would use PayPal via smartphone app. In addition, shoppers at the checkout counter can use PayPal by typing in a mobile phone number and a four-digit PIN that has to be set up online beforehand into the merchant's system. They can also use a PayPal card that links to their account.

"Swiping a card in a store is not hard," Marcus said during a meeting earlier on Tuesday with reporters at PayPal's headquarters in San Jose, California. "We really have to bring a lot of value to consumers to change that behavior."

Marketing will be a big part of this push. PayPal has already run several online video ads starring movie actor Jeff Goldblum to promote its payment service.

EBay ran a big TV ad campaign in 2011 which helped revive its online marketplace. EBay waited to fix consumer problems with the marketplace before it spent heavily on such marketing and PayPal's Marcus is taking a similar approach now with the expansion into stores.

"We want to make sure we have enough density of consumer experiences before we do a lot of marketing," Marcus explained. "We have really only one chance at this and we do not want to disappoint customers."

PayPal has been testing a way for customers of smoothie store Jamba Juice to order ahead using PayPal's smartphone application and pick up their drinks at a separate line.

PayPal has been testing this at seven Jamba stores in the San Francisco Bay area but will roll it out at more Jamba stores across the United States. It expects to announce similar line-skipping deals with other companies soon, Marcus said.

Also on Tuesday, Marcus announced a new partnership with RadioShack Corp that will introduce PayPal into all of the electronics retailer's stores starting this month.

© Thomson Reuters 2013