PayPal on Tuesday opened up a set of APIs that will allow developers to integrate its payment capabilities within applications.
Typically, online shoppers have to visit PayPal’s site to complete purchases. The new functionality will let them complete their transaction without leaving a shopping site or game — even allowing those who don’t already have a PayPal account to set one up on the spot.
The PayPal X program was unveiled at the PayPal X Innovate 2009 conference in San Francisco along with a new developer portal, a mobile payment toolkit and introductory services pricing.
More than a dozen companies were on hand at the conference to launch applications built with PayPal X, including ShopSavvy and Sun Microsystems.
‘In the Hands of Developers’
“The whole world is going digital, and the future of how we communicate, how we get information, and even how we transact is in the hands of developers,” said Scott Thompson, PayPal’s president. “The network is the platform on which the potential of digital money will be fully realized.”
With more than 78 million active accounts in 190 markets and 24 currencies around the world, eBay-owned PayPal allows members to make payments and send money without sharing financial information with sellers.
The site now faces competition from Amazon and Google, however — both of which have developed their own online payment systems.
Aiming to expand its reach, PayPal this week rolled out a host of new capabilities for its Adaptive Payments APIs, including automatic currency conversion, parallel payments, and service for users who don’t have PayPal accounts.
A key component of the PayPal X program will be the mobile payment software development kit (SDK), which makes it easier for developers to integrate PayPal into mobile applications to buy physical goods.
With just a few lines of code, developers using the technology can add a checkout button to accept mobile payments without having to worry about collecting any financial information. The mobile SDK, which will initially support iPhone, will be available in the first half of 2010.
“Mobile transactions have been notoriously tough to monetize,” said Osama Bedier, PayPal’s vice president of platform. “With the new SDK, just tell us how much you want to get paid and what the payment is for, and the funds will be transferred in seconds, not days or weeks.”
Starting next year, PayPal is also offering reduced pricing for developers building applications in markets that are traditionally served by cash and checks, such as rent, consulting businesses or payroll.
A flat fee of 50 cents will be charged on service transactions funded by a bank account or PayPal account balance with a three-day settlement period, while a 0.75 percent fee will be charged for service transactions funded by a bank account or PayPal account balance with immediate settlement.
PayPal’s tiered e-commerce pricing scheme ranges from 1.9 to 2.9 percent plus 30 cents, while micropayment pricing is 5 percent plus 5 cents. The company will soon extend its free P2P pricing to developer applications, it said.
Improved Conversion Rates
“One of the areas retailers spend a tremendous amount of time on is their checkout,” Scott Silverman, executive director for Shop.org, the National Retail Federation’s digital division, told the E-Commerce Times.
“Reducing the friction and making it as easy as possible for customers to purchase products” generally translates into “significant improvements in conversation rates,” Silverman added.
Indeed, the move seems like a smart one for PayPal, added Paul Verna, a senior analyst with eMarketer.
“PayPal has transformed the e-commerce process and made it so much more streamlined,” Verna told the E-Commerce Times. “Mobile, online gaming and social networking are the areas where there’s so much activity now — it’s been waiting for someone to come in and make it easy to monetize.”
‘Consumers Enjoy Choice’
Credit cards are still the dominant payment method online, but “PayPal is a very good alternative, and it continues to grow,” Patti Freeman Evans, vice president and research director for Forrester Research, told the E-Commerce Times.
The platform is gaining traction outside of eBay, she noted, and particularly during these difficult economic times, “consumers enjoy choice.”
On the business side, meanwhile, “this open API allows for easier access to implementing PayPal on one’s site,” she added. “It allows the small, medium and big guys to do it in a way that works for them.
“That’s all good,” she concluded. “It’s good for PayPal, which can scale its distribution this way, and it’s good for retailers, which gain easy access to an alternative payment method on their site.”