McDonald's Tests Mobile Payments App by PayPal

McDonald's, the world's biggest hamburger chain, is testing a new payment system that could allow customers to purchase their meals using mobile devices, making it the latest franchise to get into the mobile payment game.

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According to Reuters, 30 restaurants in France are involved in the trial, which allows customers' payments to beprocessed by eBay's electronic payment company, PayPal. Earlier this year, McDonald's ran demonstrations of a broader PayPal mobile payments service at its franchisee conference in Orlando, Florida.

The participating French restaurants allow customers to order food through their Smartphones or tablets, using a McDonald's mobile application, and then pay through PayPal. Customers then wait in a separate line to pick up their app-ordered meals.

The report says that the concept, which was demonstrated at a McDonald's conference in Orlando earlier this year, is expected be instituted in more McDonald's during the next couple of years.

PayPal is entering the mobile payment race which is currently largely dominated by Square Inc and other technology companies. The race is on to see who will become the mobile payments service of choice as consumers increasingly use smart phones to make purchases in shops, restaurants and other retail locations. Square recently signed a landmark deal with Starbucks, whereby the mobile payments startup will process credit and debit card transactions at the coffee chain's U.S. stores.

Last week, Dunkin' Donuts rolled out a mobile payment app that allows consumers to pay, look up the nearest Dunkin' Donuts location, and get nutritional information on menu items.