PayPal (News - Alert) has bought a mobile payments startup called FigCard, PayPal announced on its blog today. Boston-based Fig Card has developed an easy way for merchants to accept mobile payments in stores by using a simple and low-cost USB device that plugs into the cash register or point-of-sale terminal. To pay via the FigCard system, customers need only install the Fig app on their smartphones.

Wrote Peter Chu, senior director of PayPal Mobile on the company's official blog, “We loved their [FigCard's] approach to point-of-sale, particularly because it was driven by the same vision that we have at PayPal – in the future, transactions can be as smart as a computer and not as dumb as paper. We won’t need our physical wallets. We’ll be able to pay any way we want, from any device, anywhere in the world with both flexibility and privacy.”

FigCard had an interesting model, notes Business Insider. The company makes a USB stick that merchants can simply stick into their cash registers, allowing them to take payments via smartphones...if the customer has the FigCard app installed.

“Obviously this creates a chicken and egg problem that will be much easier to overcome with PayPal's huge installed base and mobile API,” noted Business Insider's Pascal-Emmanuel Gobry.

Mobile payment systems are one of the “next big things,” and companies of all sizes are looking to get a foot in the door. Google (News - Alert) reportedly seeks to include “contact-less” payments in newer Android phones, as does Apple for its iOS devices. And Square has a disruptive plan for mobile payments thanks to its dongle, noted Gobry.

Fig Card was founded in early 2010 by Hasty Granbery and Max Metral, who will both join PayPal Mobile with the acquisition. Both are successful entrepreneurs: Metral was co-founder and CTO of Firefly, where he helped define many of the governing principles of privacy on the Web that are still used today. Firefly was sold to Microsoft (News - Alert), and Metral went on to architect Microsoft Passport, one of the first single sign-on systems.

Granbery and Metral met at PeoplePC – another company that Metral co-founded — which was sold to Earthlink (News - Alert). They reunited at a software platform company called Arts Alliance Labs, which Metral also founded. While at Arts Alliance Labs, Granbery came up with the idea for Povo.com, a wiki for local businesses where users not only built the content but the functionality of the site as well. eBay (News - Alert), the parent company of PayPal, has not disclosed the financial terms of the purchase.