PayPal is opening up substantial parts of its global transactional engine, extending the open platform dubbed “PayPal X,” company executives announced this morning at PayPal’s X Innovate 2009 developer conference in San Francisco. PayPal developers and users now have access to a slew of new APIs, ranging from an extended version of the Adaptive Payments API that PayPal made available in July, to an Adaptive Accounts API designed to make it easier for people to sign up for accounts. The APIs, technical documentation, sample applications and more are available at PayPal’s X.com web site.
PayPal’s move to open its platform has been under way for some time, and it represents an important shift in the company’s strategy. It may usher in new breeds of payment-centric applications, including ones focused on microtransactions and mobile payments. In-application payments, which Apple is now allowing in iPhone apps, are also a focus for the PayPal X platform.
“We’re introducing new APIs and new pricing,” said Osama Bedier, VP of Platform technology at PayPal. Specifically, PayPal will charge 50 cents as a flat fee for transactions, in an effort to encourage more micropayments and applications that facilitate them. Many new APIs are available, and the snapshot of a slide below shows only some of them. (All are available at X.com.)
The Adaptive Payments API has capabilities for currency conversion, enhancements such as faster pre-approval, and can send payments between many types of mobile devices, Bedier said. Mobile devices, in fact, were much discussed at the conference. PayPal President Scott Thompson said that “cash is obsolete,” and added:
Think about the possibilities for things like mobile money through an open platform, and how the mobile wallet will live in the cloud. The network is the platform on which the potential for digital money will be fully realized.
Thompson said that there are over 78 million active PayPal accounts, and Bedier added that PayPal transactions total more than $70 billion per year, but eBay CEO John Donahoe said he expects PayPal to get much bigger, and, in fact, become much bigger than eBay is. “We believe that the Internet, and e-commerce, and online payments are still in their early days. E-commerce is only 15 years old, and online payments are only 10 years old,” Donahoe said.
He also said that “while eBay and PayPal and Skype have all enjoyed enormous success, quite frankly, beyond our business model, we’ve never been known as particularly innovative. So I’m putting technology people in charge.” He singled out Thompson’s appointment as president of PayPal, and noted that he recruited Marc Andreessen to eBay’s board for the same reason.
PayPal’s Open X platform looks like a good move toward openness for the company as in-app payments, mobile applications that emphasize payments, microtransactions and other trends change the company’s business. More openness may also be a good answer to increasing competition from Google Checkout, Checkout from Amazon, and transactions on Facebook.
It remains to be seen how open PayPal will really be with Open X, though. There is a big difference between opening up APIs and open sourcing critical code components. Time will tell if PayPal’s partially open bet pays off.