Soon, anywhere you see a Discover logo, you’ll be able to use your PayPal account to buy everything from coffee to clothing in 7 million retail locations across the country. PayPal has been all about expanding its offline presence, and this next step is a pretty big push in that direction.

Here’s how it’ll work: PayPal will send out special new cards to its 50 million active users, that can be swiped at any stores accepting Discover. Customers will then enter a four-digit PIN to complete the transaction, which will be processed on Discover’s network.

The new service will start up next year, and will bolster PayPal’s already existing deals with the 15 major retailers that now accept PayPal mobile payments at their stores.

This is a win-win-win for all parties involved — customers who like using PayPal online already will have another choice in how to pay, PayPal gets more real-world presence and Discover will increase the volume of payments made on its network which could convince more merchants to accept Discover cards. Plus, it’s bound to make Visa, MasterCard and American Express totally jealous.

PayPal to offer in-store payments thru Discover [BusinessWeek]

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