PayPal has done quite a bit of innovating in online payments over the last few months.
First, in a partnership with VeriSign, it launched the PayPal Security Key. This is a highly secure add-on to their transaction system that "[generates] a unique six-digit security code about every 30 seconds. You enter that code when you log in to your PayPal or eBay account with your regular user name and password. Then the code expires - no-one else can use it."
Now, Reuters reports that, in a partnership with MasterCard, it's about to launch the PayPal Secure Card. This software utility "generates a unique MasterCard number each time a PayPal user arrives on an e-commerce sales checkout page that does not otherwise accept its payments." To the merchant whose page you're on, your payment looks just like any other MasterCard transaction. While to you, it looks just like any other PayPal transaction.
In a word: awesome!