PayPal Opens Door to Developers

PayPal on Thursday opened its online payments system to third-party developers so they can embed a variety of PayPal payment mechanisms into Internet-based services.

The widely used payment provider, a division of eBay, formally announced the Adaptive Payments System at its Platform Preview Event in San Jose, California, after confirming some details about it earlier this month. PayPal began making APIs (application programming interfaces) available to developers and will add "dozens more" later this year, said Osama Bedier, vice president of platform and emerging technology.

"PayPal will be the first and only global payment service open to third-party developers," PayPal President Scott Thompson said at the launch event, which was webcast. The company intends to help developers implement payment tools that go beyond traditional e-commerce purchases to support a wider variety of services.

"Innovators like you need (to) and should get paid for your great concepts," Thompson said. Without an easy way to sell online services around the world, only a few innovators will bother, he said.

Adaptive Payments includes a variety of tools for creating new payment tools. For example, it allows one payee to take its cut of a customer's payment and then split the rest among partner companies. Developers can also separate transaction approval from payment so the payment can take place offline or in some other setting with another approval, Bedier said. Adaptive Payments could also support payments over set-top boxes or mobile gaming platforms.

The company waited this long to introduce the developer program because it needed to make sure PayPal's security was strong enough, Bedier said. Some observers say PayPal is catching up to Amazon.com, which already offers APIs that give developers many options for using its payments platform. PayPal claims it has about 75 million active accounts in 190 countries, making payments in 19 currencies. The expansion of Internet-based services beyond traditional online shopping represents a big opportunity, according to PayPal.

Several companies joined PayPal with plans to use or support Adaptive Payments. Most notably, Microsoft said it will enable developers to embed PayPal payment systems in applications developed and delivered on Azure, its cloud computing infrastructure due later this year.

TwitPay, a startup offering payments on Twitter via PayPal accounts, is a beta tester of Adaptive Payments. It used PayPal's APIs to create capabilities such as making a single payment that is split up among several recipients, said TwitPay CEO and cofounder Michael Ivey. Among other things, TwitPay allows users to settle debts, run up tabs and get paid for Twitter-based applications, he said.

LiveOps, another beta customer, uses cloud computing to bring together teams of call-center operators who work at home. LiveOps is expanding its offerings to include services such as transcription, translation and document review. The new service, called LiveWork, has been collecting payments with a system based on Adaptive Payments for several months, said Michael Neril, senior director of LiveWork business development. It was easy to integrate the payment system into the LiveWork service and took just a few days, Neril said.

Developers can apply to get involved in the beta program for Adaptive Payments through x.com, PayPal's developer site. Through "code and build" sessions in the next few months, about 300 will be admitted by November, the company said. Beta users can use the platform for payment systems on live, commercial services.

On Nov. 3-4, PayPal will hold its first developer conference, PayPal Innovate X, in San Francisco. The beta program will expand further after that, but PayPal won't give a date when Adaptive Payments will emerge from beta.

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