By Louis Ramirez, dealnews Senior Feature Writer internetretailer.com PayPal is coming to a store near you. In an effort to extend its reach beyond the internet (and to checkout counters across the country), the payment service has forged an alliance with Discover Financial Services to allow retail stores that accept Discover card to also offer PayPal as a payment option. Formed last August, the alliance has brought PayPal to as many as 250,000 retail stores with big-name merchants like Home Depot, JCPenney, Toys "R" Us, and Foot Locker. Last week, PayPal announced a plan to expand its mobile wallet service even further, increasing its availability to an estimated 2 million stores by year's end. But before PayPal can pop any champagne bottles, there are a few obstacles it must overcome. Walmart, the nation's largest retail chain, has said it will not accept PayPal inside its retail stores. Likewise, Discover is still only in negotiations with one of the largest merchant acquirers, Atlanta-based First Data Corp. But perhaps most pressing: PayPal needs to convince you, the consumer, to leave your easy-to-use credit card at home and instead reach for your PayPal card to complete your purchases. Consumer Incentives for In-Store PayPal Payments But before customers ditch their credit cards, they need to know how PayPal's mobile wallet works. Fortunately, it's simple. PayPal checkout essentially allows shoppers with a PayPal account to use their PayPal funds for purchases at any brick-and-mortar store that accepts Discover cards. To checkout, shoppers can either request a physical PayPal card from the company (which can be swiped like any credit or debit card), or if they prefer to go card-less, they can enter their mobile phone number along with a 4-digit personal identification code (provided by PayPal) at any checkout counter equipped with a PIN reader. "The benefits to PayPal in-store are the same as using PayPal online," says Jennifer Hakes, Director of Corporate Communications at PayPal. "You get unparalleled security, payment flexibility, and a super easy way to make purchases." Initially, we saw PayPal offer a variety of Editors' Choice deals to entice people to try their new service. Many of these deals occurred during the holidays, when customers were especially looking for promos. For instance, during the week before Christmas, Dollar General, Guitar Center, Home Depot, and Nine West each took $10 off purchases of $30 or more when customers paid via PayPal. Toys "R" Us also offered $10 off purchases of $50 or more. Home Depot took the cake though and offered the most incentives, at times rewarding PayPal customers with iTunes gift cards or even donations to charities. Despite that flurry of initial promotions, there are no discount codes currently available for using a PayPal card in-store, and there hasn't been one since mid-April. Moreover, PayPal doesn't offer a rewards programs for in-store use, which would incentivize between promos; the service is more about payment flexibility, though customers who choose to fund their PayPal account with a credit card that offers rewards will still be able to earn rewards on that card. That's not to say PayPal itself won't offer rewards down the line, but for the time being, the company is keeping things simple. Indeed, not only has it been since mid-April that we've seen a PayPal promo at all, but some retailers like Dollar General, Toys "R" Us, and Nine West haven't seen any specials since December. Whether consumers will want to use PayPal at retail checkout is yet to be seen. And with stiff competition from the likes of Google and Square, to name a few, it could be some time before mobile wallets truly take off. Readers, where do you stand on mobile wallets? Do you think you'll use PayPal to pay in-store anytime soon? Related dealnews Features: Mobile Checkout in Stores Could Pressure Customers to Overspend Your Smartphone Is Making You Spend More on Groceries Noteworthy Retailer Apps That Save You Time and Money An avid gadget lover, Louis Ramirez has covered technology for Gizmodo, CNET, Laptop, and various other publications. Follow him on Twitter at @LouisRamirez. Follow @dealnews for the latest roundups, price trend info, and stories. You can also sign up for an email alert for all dealnews features.