We knew that PayPal was working on a revamp of its service with some forward-thinking features, and the company's Sam Shrauger shared a demo of the new system with eBay Ink ahead of its official debut today at SXSW. As expected, PayPal's new "digital wallet" system provides a seven-day grace period that will allow users to change the method they've used to pay for an item after they've already taken it home, all handled through a completely redesigned web interface. The company also showed off a rules-based savings system that will allow users to set up virtual accounts in anticipation of a vacation or holiday, directing money to them automatically and then allowing users to use the accounts as a separate source of payment. The new system will also feature intelligent integration with other "digital forms of value," allowing it to utilize loyalty cards, coupons, and intelligently switch to store-specific credit cards based on the merchant. The new features are expected to roll out this May.

Of course, the system can only do so much without point-of-sale integration with retailers. PayPal had been testing just such a system at Home Depot stores — it recently rolled out to all 2,000 locations — but there's another facet of PayPal's strategy that could bear even more fruit in this regard. The company is reportedly developing a triangle-shaped credit card reader that would compete against the likes of Square, which could instantly bring the new digital wallet experience to independent merchants and vendors. PayPal has an event scheduled for this Thursday that may see that device officially announced, and we'll be there to bring you all the details.