The eBay-owned firm will compete with Groupon and Livingsocial, offering daily vouchers to its subscribers from early next year.
Scott Thompson, president of PayPal, told Bloomberg that the company will tailor its offers based on its 103 million members' past purchases. The service is scheduled to launch in the US before April 2012.
Daily deal businesses offer web users significant reductions on everything from spa treatment to cinema tickets. Revenue is split between the service provider and the daily deal website. Companies only profit if the customer brings repeat business.
Thompson added that PayPal's service will differ from its competitors because it will only offer relevant deals, rather than "bombard" the user.
Daily deal data aggregator Yipit claims that the market leaders sold close to $210m (£135m) worth of coupons in North America in October.
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