PayPal to Open Platform to Third-party Developers

PayPal will soon open up its platform to third-party developers, allowing them to build applications with a range of money transfer options.

PayPal, which is owned by eBay, is developing what it calls the Adaptive Payments Service, which consists of a set of APIs (application programming interfaces) that let different programs exchange information.

In PayPal's case, the APIs will allow applications that can support transactions such as "chain payments," where a buyer sends a payment to a primary seller, which then can pass on portions of that money to others with an interest in the transaction.

The APIs will be previewed at PayPal's corporate headquarters in San Jose, California, on July 23, wrote Damon Hougland, senior director of product development.

"We believe that providing a global payments platform will open up countless opportunities for developers to innovate and create new revenue streams," Hougland wrote.

PayPal's plans slipped out when a confidential company document was posted on TechCrunch's blog. Hougland and Osama Bedier, vice president of platform and emerging technology, confirmed PayPal's plans in blog postings.

The document lays out several features that give retailers or other sellers more options to streamline how they receive money.

One option is a parallel payment. A buyer sends one payment that can is sent to between two to six receivers. It differs from a chain payment in that the buyer would potentially interact with all of the sellers, whereas in a chain payment the contact is only with the primary receiver of the money.

PayPal levies a fee for money transfers, but those implementing the APIs can determine whether the buyer or seller should pay those fees. All participants must have a PayPal account.

PayPal is playing a bit of catch up to Amazon.com, which already has many of the same features available as part its Amazon Payments program. Amazon's Flexible Payments Service offers APIs that let developers have much control over how their transactions are conducted using their application on Amazon's platform.