08/28/2013 15:10 EDT | Updated 10/28/2013 05:12 EDT

PayPal, TouchBistro bring smartphone payments to Toronto restaurants

PayPal Canada is launching a Toronto pilot project of its new software that allows restaurant patrons to pay for meals using their smartphones.

The online-payment pioneer is looking to to expand its business by introducing new electronic-payment options to brick-and-mortar stores, said Darrell MacMullin, managing director of PayPal Canada.

It is partnering with TouchBistro, which operates iPad-based point of sale terminals at Canadian restaurants, food trucks and cafes, to launch the restaurant payment service in Canada.

Jimmy's Coffee, a coffee shop in the King West neighbourhood that previously accepted only cash and debit card payments, is one of the first restaurants to accept PayPal mobile payments via a TouchBistro device.

Select restaurants throughout the city will help pilot the technology. PayPal has already launched a similar system in the U.K.

Restaurants pay a percentage of the bill — between two and three per cent — to PayPal for every transaction.

PayPal Canada is promoting the smartphone payment option to restaurants as a way to add a mobile payment option without investing in new hardware, MacMullin said.

He also sees TouchBistro as a way for restaurant staff to interact more effectively with customers, who can "check-in" to the restaurant before they arrive and be greeted at the door by name or arrange to have their order ready.

The user photo that pops up when a customer pays or orders also helps the restaurant verify who they are dealing with, PayPal says.

There is a heated race involving banks, telecom and tech giants such as Google and Apple to get consumers to adopt technology to pay via mobile phone. The so-called wallet-free experience allows customers to pay using an app on the phone they already have in their hand, rather than digging around for a wallet.

Ottawa-based Shopify is launching a similar app for other kinds of retailers.

PayPal has about five million Canadian customers and 132 million active accounts worldwide.