PayPal Unveils Platform X, And with It an Array of APIs And New Pricing

Hoping to inspire a burst of innovation beyond what it could expect to deliver within its own research-and-development budget, PayPal Inc. on Tuesday officially turned its global payment engine over to software developers with an array of new application programming interfaces (APIs). With the unveiling of the APIs, which took place in San Francisco at the e-commerce processor's first developers' conference in its 11-year history, developers will be able to more readily introduce applications that could, for example, convert rewards points into cash, process business-to-business payments, allow price-comparison engines to process payments, and let consumers pay each other through online-banking sites. The new APIs tie into PayPal's so-called Platform X, which it unveiled at the conference. The platform's name harks back to the early days of PayPal, when its original development platform bore the “X” designation. PayPal also announced it will introduce new pricing early next year for payments for so-called services for which it expects developers will create applications, including rent, payroll, and government payments. The new pricing is 50 cents or 0.75% per transaction, and applies when payors use existing PayPal accounts or the automated clearing house to fund their payments. Speaking to Digital Transactions News, Osama Bedier, vice president for the PayPal platform and product development, said the company hasn't fixed a date yet for the new pricing to take effect. He said whether the flat 50-cent or 0.75% fee applies will largely depend on risk. “How do we do it without losing our shirt?” he said. “When there's a low-risk segment we'll pass on our savings and make it 50 cents.” The pricing is expected to be considerably more attractive for services than PayPal's standard fees, which range from 1.9% plus 30 cents to 2.9% plus 30 cents. It drew loud applause when announced Tuesday morning at the developers' conference, dubbed PayPal Innovate 2009. “We've heard you loud and clear,” Bedier said to the audience. “You've got to have better pricing. 3% doesn't cut it for rent.” Several new APIs for such functions as currency conversion, pre-approvals, and person-to-person payments were announced at the conference to join APIs for chained, parallel, and single payments that PayPal first disclosed this summer (Digital Transactions News, July 8). PayPal says the new APIs, collectively called Adaptive Payments, should give developers a head start in creating new applications that would otherwise require months or years of programming to take account, for example, of complicated requirements such as compliance with the Payment Card Industry data-security standard. Companies already taking advantage of the new APIs include Fidelity National Information Services and S1 Corp., both of which announced they will use an API to let client banks enable person-to-person payments. FIS will pilot the service, which will rely on online-banking sites, in the first quarter and make it live for its entire client base in the second quarter. S1's service, though similar, will be delivered via mobile phones. Another company exploiting PayPal's new platform is Dallas-based Big In Japan, whose ShopSavvy comparison-shopping application for mobile phones is using an API to let users pay for products on the spot through PayPal. PayPal also introduced Adaptive Accounts, an API that allows developers to automate the creation of PayPal accounts within applications. The API will be useful in cases where customers aren't current PayPal users, Bedier told Digital Transactions News. “It removes a large part of the friction” in enrolling users, Bedier said. John Donahoe, chief executive of PayPal parent eBay Inc., told the audience of developers that the decision to open the PayPal platform was driven largely by the need to harness developers' work in payments to meet eBay's stated goal to double PayPal's size over the coming three years. That work will clearly expand PayPal's ability to innovate, said Scott Thompson, PayPal's president, in a news conference later in the morning. “What these developers are doing will supplement our R&D spend,” he said.