PayPal Inc. is testing its point-of-sale software in five Home Depot stores in the latest part of the online payments company's campaign to cut out traditional networks Visa Inc. and MasterCard Worldwide.

Home Depot customers can check out at those five stores by entering their phone numbers and PayPal PIN numbers, or by swiping their PayPal cards, at the point of sale, according to PayPal spokesperson Amanda Pires.

"I can confirm that we are in a trial with Home Depot," she said in an interview Dec. 6. "We are in a limited trial program with our [point of sale] technologies."

A "small number" of PayPal employees are in the Home Depot stores to help walk customers through those transactions, she said. She would not identify which five Home Depot stores are involved in the trial.

PayPal, a unit of Ebay Inc., has been ramping up its efforts to compete with traditional payments companies, including Visa and MasterCard. In October they announced plans for a magnetic stripe card, which allows consumers to use their PayPal accounts in physical stores instead of just online.

Wedbush Securities analyst Gil B. Luria first speculated about the Home Depot trial in a note to investors on Friday. He says he learned of the tests by calling a Home Depot store in San Jose, Calif., close to PayPal's headquarters.

"They have been talking about doing a friends-and-family trial, and this is it," says Luria. "Once Home Depot is ready to roll it out, they will announce it and roll it out to all their stores."

Jeremy Quittner contributed to this story.

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