PayPal is diving into the daily deals business. The eBay-owned company will challenge Groupon and Living Social, offering coupons to its more than 100 million users in the first quarter of 2012. The deals, tailored to users' buying history and cell phone location, will arrive via smartphones and other mobile devices.

The company will partner with some of the country's top 200 merchants (BestBuy and Target, for example, already use PayPal for transactions) for the deals, PayPal president Scott Thompson told Bloomberg.

The move may not come as much of a surprise for PayPal watchers: Its corporate parent eBay acquired location-based mobile advertising and services start-up Where in April for an undisclosed sum. PayPal was integrated into the company's mobile app.

"The acquisition of Where will help us help retailers reach consumers through hyper-local offers and deals," eBay spokeswoman Kathy Chui said at the time. The acquisition followed the company's $75 million acquisition of local shopping search engine Milo and its buyout of RedLaser for an undisclosed amount.

Four of the biggest daily deals players sold close to $210 million worth of coupons in the U.S. in October, according to daily deal data aggregator Yipit. The four firms surveyed: Groupon, Living Social, Amazon Local and Google Offers. PayPal is hoping a move into the space will help the company hit its 2013 revenue goal of $7 billion by 2013, nearly double its 2010 revenue of $3.4 billion.

How will PayPal's daily deals rise above the fray? Thompson said the company will only offer "unique and relevant" offers, rather than "bombard" its 103 million users.

"The experience is going to be completely different than anyone else's through and through," Thompson told Bloomberg. "We'll only give you something that we think fits the category of unique and relevant. Everyone else is going to bombard you."

Groupon, meanwhile, is trying to hang onto its lead by increasing its range of offers. Earlier this week the company offered a $20,000 pair of business class tickets to fly around the world with up to 10 stopovers. (It was a deal because it was 50 percent off the usual price.)