PayPal's core activity has always been payment facilitation.

But now it's changing. It's identified obstacles to e-commerce which mean merchants are losing out, and it's thinking of ways to overcome them.

So it's developing technical solutions which it hopes will place it in the buying process much earlier than the sale, even to the point of helping merchants generate demand. Not surprisingly, a lot of its plans revolve around mobile.

The news is announced in grandiose terms at the PayPal blog, where it says they're "re-imagining money". In practical terms that includes

• helping merchants advertise to mobile phones or tablets when a customer is in the area, and transferring special offers to their phones
• letting people pay on mobile just by scanning a product's barcode and avoid the checkout queue
• helping merchants adapt their e-commerce websites dynamically, depending on the current state of their inventory
• allowing person-to-person bump payments between mobile phones
• arranging consumer credit on the fly 

Naturally all this will be integrated with the e-commerce software Magento, so developers will be able to start building apps to bring it into their own businesses.

At least in theory. The announcement and the video are very enticing and quite forward-thinking. We're in the age of coupons (see, for example, the rapid growth of Groupon), so PayPal naturally wants to be part of that. And it's clear that merchants need to take advantage of mobile e-commerce.

But how much of it will turn into a practical reality soon is less clear. The comments on DigitalBuzz show that people are less confident in PayPal's ability to deliver, and that the innovations aren't entirely clear. If you're involved in e-commerce though, it's worth understanding PayPal's ideas. They've identified genuine "pain points" in e-commerce, and merchants will benefit from at least considering them. The technical solutions they find may not be arriving tomorrow, and they may not even involve PayPal, but they will make the sales process smoother and make online businesses more competitive.