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You can now use PayPal to buy iPhone apps

  • PayPal users can now pay for goods in the iTunes App Store with PayPal.
  • Apple previously limited users to using credit and debit cards.
Dan Schulman
Scott Mlyn | CNBC
Dan Schulman

IPhone and iPad users can now make purchases on the iTunes App Store with PayPal.

This might help quell fears among holdouts still worried about using their credit cards online.

PayPal's service is now available in the United States, Canada, Mexico, the company said Wednesday.

Handout: Paypal Itunes
PayPal

Customers can swap to the PayPal payment option by opening iTunes and navigating to the settings menu, where it is listed as an option.

The move is surprising since Apple tends to avoid third party services that compete with the tech giant. PayPal didn't say how much of the revenue generated from each purchase will be given to Apple.

"While difficult to size, the deal is significant as it provides yet another example of a payment for (Apple Pay) choosing to work with PayPal as a payment partner," JPMorgan's Tien-tsin Huang said in a note Wednesday.

Shares of PayPal were up 3.5 percent in premarket trading.