PayPal Listens to its Developer Pals to Drive Growth

PayPal has made recent advancements in its payments platform to better compete with challengers, like Google Checkout and Checkout by Amazon, and retain its top spot as the leading online payment method other than credit and debit cards.

The moves in large part are in response to its developer community, the company says. In November, PayPal launched PayPal X, an initiative that allows developers to build services on top of PayPal’s payment platform through the use of PayPal’s Adaptive Payments application programming interface, or API.

Today, this service enables software developers to plug PayPal’s transaction and payment technology into their payment systems for several purposes, such as to preapprove payments; to split payments, such as a restaurant bill, among many recipients; and to use a technology called Bump, which allows consumers to “bump” iPhones together to transfer money. PayPal X has been popular, with 30,000 developers using it as of April, according to PayPal, a subsidiary of eBay Inc.

PayPal last month introduced a Guest Payments service, enabling developers to accept credit cards through PayPal without requiring their customers to open up a PayPal account. This new service can ease headaches for merchants, says David Evans, founder of Market Platform Dynamics, a management consulting firm. It eliminates the need for merchants to offer additional payment methods and makes transactions quicker because the PayPal account signup is no longer necessary, he says. 

“PayPal recognizes that one important step to getting merchants to adopt new payment mechanisms is to create lots of consumer demand and preference for a payment mechanism,” Evans says. “Guest Payments appears to decouple the payment transaction from payment acceptance, making it easy for consumers and merchants to do business.”

In addition, PayPal announced last week that it planned to introduce this summer the mobile version of its Express Checkout technology used by many e-commerce sites. Designed to streamline mobile payments, Mobile Express Checkout allows customers to store shipping and billing information in their PayPal accounts so they can pay with a single click after logging in.

Initially, Mobile Express Checkout will be available on Apple Inc.’s iPhone and mobile devices using Google Inc.’s Android 2.0 and higher versions of the Android operating system from  a few retailers, including Nike and Inc. “The largest benefit to offering Mobile Express Checkout is to streamline the PayPal checkout process and offer a more simplistic view catered to one’s mobile device,” says Neel Grover,’s president and CEO. “Consumer demand for mobile commerce is at a tipping point, and we see a great opportunity to lead the retail industry into a channel that is rapidly becoming mainstream.”

Indeed. PayPal, which has been processing mobile-transactions since 2005, has experienced a nearly six-fold increase in mobile transactions over the past two years from $25 million in 2008 to $141 million in 2009, a spokesman says. PayPal expects to process $500 million in mobile payments in 2010, he says.

At least 30% of PayPal X’s future advancements will be driven by the developer community, the spokesman says. Though mobile technology is hot right now,  it’s not the only place for growth, he adds.

“PayPal X has taken us places we’d never go as a company,” the spokesman says. “The whole thinking behind PayPal X was that we created the basic framework and the developers will innovate from there.” 

Source: Internet Retailer