PayPal, the online payments and money transfer giant, last week announced a new milestone in its partnership with Discover. As of last week, Discover has deals with 50 merchant acquirers to offer PayPal’s service as a payment option at more than 2 million merchant checkout locations by end of 2013. The announcement represents significant progress in the partnership, which was initiated late last year and which has the potential to get PayPal into 7 million locations over time. It also builds on other recent forays by PayPal into POS systems as well as directly into retail stores. This looks like a win-win for both PayPal and Discover. PayPal gets additional physical retail presence to make more off its 110 million user base. Discover gets millions of users for its interchange transaction fee. Both get an opportunity to poach consumers away from Visa and MasterCard.

How far can PayPal reach in this quest? Quite far, really, in one manner of thinking! As and when PayPal decides to become a transactional social network and positions itself for mobile and social commerce, its various partnerships could give PayPal the broad reach that brings credibility with the average, global customer, creating a positive customer acquisition feedback loop. If all goes well, PayPal’s customer base and technology platform could over time become the glue that brings together POS and financial players around high-resolution, itemized purchase data, something that no entity – not Google, not Facebook, not the banks – has been able to achieve so far. And this data could be a gold-mine for offers, promotions and competitive positioning, subject of course to privacy standards and regulatory guidelines. It probably feels great to be PayPal right now (and better than before to be Discover!).

When money is involved, you never know where all the show-stoppers are, but until then, PayPal app-store, anyone?