Paypal is preparing itself to take on the might of Groupon and Living Social by providing a daily deals service for its customers early next year.

Via its website, Groupon currently offers a range of deals based on your location, giving consumers up to 90 percent off the likes of beauty services and hotel trips.

In the US alone, the daily coupon market is expected to double by 2015 to almost $4.2 billion, according to research firm BIA/Kelsey, and in October Bloomberg reported that Groupon and Living Social control a huge 73 percent of that market.

With the eBay-owned e-payment site getting ready to muscle in with its own service, the two companies have reason to be shifting uneasily in their chairs this morning.

Paypal currently boasts 103 million subscribers and believes it can set itself apart from its competitors by offering deals that are targeted specifically at their customers' buying habits.

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

Paypal will initially rollout the service in the US with 200 merchants already signed-up.

Source: Bloomberg