Online auction company eBay has just announced its deal to acquire location-based service WHERE. Details on the deal are currently under wraps, but it will certainly fill out their portfolio. The deal is expected to close later this quarter.

“As a first step, we plan to integrate PayPal into the WHERE mobile app to make it even easier for PayPal customers to take advantage of the local deals,” wrote Amanda Pires, Senior Director, Global Communications, Brand, Experiential Marketing, PayPal. “As John Donahoe said at analyst day, eBay Inc. is at the forefront of a new retail landscape, which is more convenient, more accessible, more local and – and more relevant to more consumers than ever before.

WHERE has made a big dent in the hyperlocal services scene over the past year and a half. Last year, they acquired LocalGinger Inc., which acts a lot like GroupOn in providing daily deals for neighborhoods and communities and WHERE sought to bring those to mobile phones. Late last year, WHERE added expert curation and discovery for local businesses, opening a deeper market for local brick and mortar stores to reach out to mobile wielding customers. And, very recently, the startup partnered with Bump to foment a hyperlocal social sphere to generate recommendations based on friend relationships.

This recommendation engine, Perfect Places, provides a backdrop that makes WHERE a particularly useful application for mobile users. And, with this marriage to PayPal, it might just be the killer hyperlocal application.

“The recommendation engine we have on the consumer app is built on two algorithmic approaches,” Dan Gilmartin, Vice President of Marketing at WHERE said in an interview with SiliconANGLE News Editor Kristen Nicole, “from collaborative filtering and the dimension reduction approach. That looks at the dimensions of places; what’s the price point, what type of food you like, do you need reservations, etc. We compare those places to create connections.”

eBay themselves mentions that WHERE blurs the lines between brick and mortar retail and mobile. By reaching out to users, a small lunch café might be able to gather a small flock of interested parties because a group of friends discover they all get the same recommendation. With those connections down, and a coupon sent to their phones, they arrive on scene, pay with Paypal, present their phones at the register (and probably use NFC.) One bump later a sandwich for our intrepid explorers and their Android app and a new set of future customers for the café—not to mention a nice commission for PayPal for facilitating the entire deal.

This sort of advertising combined with a higher rate of potential purchase is a sought-after revenue model for a lot of hyperlocal advertisers. Including a payment system embedded with the application will make it a one-stop-shop for a social retail experience.

We’ll have our eye on the eBay-WHERE deal for a time to come as it will most likely bellwether the future of this sort of interaction.