Whenever we need to buy something online, we have the option of using our credit card directly, or our PayPal account.  No fuss.  But when you’re a seller setting up shop online, it’s not that simple.  PayPal requires you to have a merchant account, like Yahoo Stores, which will further require you to have your own website.  It’s quite daunting.  So some merchants just opt to use their Facebook accounts to sell their items, which comes with its own set of issues, like bogus buyers and joy reservers.

This is a problem WePay addresses, hoping to make things easier for both sellers and buyers.  Though WePay started out as a payment collection company for fraternities, organizations and small groups, they are now expanding to cater to everyone’s needs, and in some ways, outright competing with PayPal.

While WePay did not originally announce their intention to go after PayPal, Aberman is clear about that now. “Our goal is, we’re taking on PayPal,” WePay co-founder Rich Aberman says. “Our goal is to replace them as the de facto way to pay online.”

Though there are other options on setting-up shops online, most of them have monthly fees and additional fees for every transactions.  WePay charges 3.5%, while PayPal charges about 1.9% to 2.9% plus $0.30 per transaction.  So they’re roughly the same rate.  Aside from this, they have Max Levchin, who built much of PayPal’s anti-fraudulent system, adding some experience and validation to the project.

StartupTees.com is one shop that already uses WePay.  The hope is that with a great offering at launch, more merchants will soon be transferring shops to WePay.  The startup is backed by August Capital, Highland Capital Partners and YCombinator.

So what’s PayPal doing about WePay and other competitors?  PayPal’s venturing out to the offline world as they aim to expand to consumers by allowing them to use their PayPal account while they are actually in the store.  Android users can use the PayPal app to pay and receive payments by tapping two near field communication (NFC)-enabled devices together at the point of sale.

PayPal’s new mobile payment service will only work currently in the U.S. with the Samsung Nexus S from Sprint and T-Mobile but will expand to other Android phones that include NFC functionality in the future.

The transactions utilize an encrypted token and don’t access the secure element inside the NFC chip, where payment credentials reside. It appears this is set up for just peer-to-peer transfers, which is still a big part of PayPal’s mobile payments business.