While purchasing via mobile is possible in Australia most current services apply the charge via the user's mobile phone bill, and the service providers' commission, which can be as high as 50 percent, has made this system prohibitively expensive for most merchants. PayPal, in contrast, charges its standard rates: a maximum of 2.4 percent plus a flat fee of 30 cents per transaction and for 'micropayments' around five percent plus five cents.

Jason Nealon, vice president of business development for Warner Music in Australia, one of the first merchants to sign up for the service said: "For us, PayPal's fees are incredibly favourable compared with the billing options offered by the telecommunications carriers.

To use PayPal Mobile Checkout, a merchant needs only to have an existing PayPal agreement and to configure is website for access from a mobile browser. According to PayPal, five million Australians have a PayPal account. However, PayPal Mobile Checkout could in the future be extended to enable cellphones to be used for making purchases of goods in bricks and mortar stores using near-field communications and for making payments for parking meters and similar.

Andrew Pipolo, managing director of PayPal Australia, told iTWire "We think there will be more and more vertical applications of this technology as merchants develop their web sites [for mobiles]. We are certainly looking at things like parking transactions in the very near future, and proximity payments [NFC] will become more attractive in future iterations...And SMS applications are coming down the line...We will see what the customer appetite for these is and take it from there. If we see some really significant consumer take up we will be more inclined to rollout new applications."

Telstra has announced plans to trial NFC to make payments via cellphones next year, in conjunction with National Australia Bank and Visa.

Research conducted by Galaxy Research for PayPal suggests that two out of three Australians would like to purchase products through their mobile phone, in particular movie tickets, pizza, gifts or music.

Several businesses have already signed up for PayPal Mobile Checkout and are in various stages of rolling out the service. The include Warner Music, Hoyts and the World Society for the Protection of Animals. At launch Deals Direct (m.catchoftheday.com.au); Ready Flowers (www.mobi.readyflowers.com.au) and Mobile Wine Club (www.mobilewineclub.com) will be accepting payments via PayPal Mobile.

PayPal charges $0.30 per transaction plus a percentage of the value of the transaction which starts at 2.4 percent for low volume merchants (less than $5000 per month of sales) decreasing to 1.1 percent for merchants selling in excess of $150,000 per month through PayPal.

Users have the option of entering their PayPal username and password, as they would when making a transaction via a PC or of registering their mobile phone number with PayPal and then entering a four to eight digit pin to authorise each transaction.