Ebay has announced that PayPal, its online payments service, will begin offering a mobile coupon service next year, which will put it into direct competition with Groupon, Living Social and other daily deals sites, according to a Bloomberg report.

The service, which Ebay says will be available for smartphones only, will be introduced in the first quarter of 2012. Despite hot competition in the daily deals and group buying space, PayPal is confident that its offering will bring something new to consumers, as its president Scott Thompson explains:

The experience is going to be completely different than anyone else’s through and through. We’ll only give you something that we think fits the category of unique and relevant. Everyone else is going to bombard you.

By focusing solely on mobile, PayPal is aiming to deliver a location-based service that serves deals to users as they pass participating outlets. The company hopes that this approach will provide a more relevant and personalised experience than existing services like Groupon.

At this stage it is not clear how the service will relate to PayPal’s existing payment system, if at all, and whether the service will be open to all, or restricted to PayPal users only.

The company is optmistic that the move into deals will help it increase annual revenue from a reported $3.4 billion in 2010, to $7 billion by 2013.