Evan Schuman's StorefrontBacktalk

The ability to check out with just a mobile phone number and PIN—no plastic card, NFC-enabled phone or other authentication hardware required—means anyone who can acquire that phone number plus PIN has a free shot at the legitimate customer’s account.

That may or may not be a PCI issue. There’s clearly no chance for a thief to steal the customer’s actual payment-card information—that’s something the customer never gives the retailer, so it’s out of PCI scope—but the phone number plus PIN might qualify as a high-value token under recent PCI rules.

Still, even if PayPal’s system passes PCI muster, there remains the disconnect between the security habits of customers and this new numbers-only approach to payments.

Right now, customers are in the habit of thinking they should be reasonably careful with PINs, but there’s no reason to be paranoid about them. After all, customers have decades of experience using payment cards under the assumption that a stolen PIN without the card is useless, and a stolen card without the PIN is almost as useless. For a thief to steal both at once would be very difficult. As long as the customer hangs onto the plastic rectangle (or the NFC-equipped phone), a stranger who’s looking over the customer’s shoulder as he enters the PIN is no big deal.

That’s the habit that thousands of PayPal users will bring into this trial. But that habit could make it very easy for a thief to casually shoulder-surf the next customer ahead in line as the full phone number and PIN are typed in.

Meanwhile, PayPal’s system is designed to work with only a software change to existing POS terminals. Some of those have recessed PIN pads, making it hard for a thief to capture keystrokes with a phone camera. Others have the keys on a flat, open surface, making numbers much easier to capture.

And with a rapidly expanding PayPal in-store trial, if thousands or even millions of PayPal users suddenly decide to jump into the system—with no one to recalibrate their ideas about how secretive to be about the numbers they key into those PIN pads—the result could be widespread fraud.

Not wholesale fraud, millions of card numbers at a time by small groups of dedicated thieves, but potentially millions of casual thieves wreaking a different sort of havoc on PayPal and its users—as well as on the reputations of retailers where fraudulent transactions are performed. (Remember, the victims will know which store to blame, even if that’s unfair; the electronic receipt will detail where the fraud took place.)

That’s a risk of the rapid expansion of a trial, and there may be no way around it. The only reasonable candidates for reminding customers to guard their PINs right now are Home Depot cashiers, most of whom still haven’t seen their first PayPal transaction. Those who have don’t seem to be doing any on-the-spot customer security training.

But they may end up as the ones who determine whether PayPal’s so-far smoothly rolling trial turns into a security nightmare.