PayPal makeover sparks developer charm offensive

PayPal, eBay's well established but aging mechanism for online payments, is trying to rebuild itself for a new generation of online commerce possibilities.

At an event for press and developers on Thursday, PayPal and its partners described several new programming interfaces that are part of the company's upcoming Adaptive Payments Service and showed what developers can do with them.

For example, Microsoft will use the interface to enable payments within its forthcoming Azure cloud-computing service. And LiveOps' on-demand outsourcing service will use it to automatically handle fluctuating payment amounts and changes to who's being paid. Finally, the interface takes PayPal beyond the browser, opening it up for use on mobile phones, set-top boxes, and other increasingly smart devices.

PayPal CEO Scott Thompson said at the event: "It puts developers in the driver's seat by allowing you to do what you want to do and [choose] how you want to get paid."

The new service will be available to 300 PayPal partners starting Thursday, with a public beta this November - just in time for PayPal X Innovate 2009, its first developer conference.

PayPal is pitching the Adaptive Payments platform to developers as a way to make building PayPal-powered payment options into their applications easier. It's also a more streamlined version of PayPal's existing program for letting businesses manage transactions between several different parties.

The new payments service is a key part in PayPal's plan to double its revenues within the next three years. Back in March, PayPal's president Scott Thompson promised as much, saying that by 2011, the company should be doing somewhere between $100-120bn in annual payments. PayPal has also had a fire lit underneath it since Amazon rolled out its own online payments service around this time last year. It let users make online purchases using billing information that was stored on Amazon.com

PayPal isn't just central to eBay's future. It will eclipse the company's auction and commerce operations, the company says.

"PayPal is a business that will be bigger than eBay," eBay chief executive John Donahoe said on Thursday at the Fortune Brainstorm conference.

On average, more than $2,000 goes through PayPal every second of each day. It has 75 million active accounts, and is available in 190 markets and 19 different currencies.

Beta testing
Before the announcement, PayPal has been working with a handful of companies to test the new APIs (application programming interfaces). One of those companies is Microsoft, which is tapping PayPal for online payments in the web applications built for the company's upcoming Azure platform.

At the unveiling, Yousef Khalidi, a Microsoft distinguished engineer, demonstrated an application that integrated PayPal's payment and billing functionality. It took only two days to integrate it into the existing product, Khalidi said.

Khalidi said that Microsoft plans to offer a simple way to build PayPal's mechanism into hosted applications as part of Azure's full release later this year.

Microsoft probably had an easier time choosing PayPal for its payment service than some of the alternatives: Amazon Flexible Payment Services and Google Checkout both come from companies in direct competition with Microsoft's Azure cloud-computing service.

Michael Ivey, CEO and co-founder of TwitPay, also took the stage to show his company's use of the new PayPal API - specifically to let people pay multiple people at once.

"In one transaction, I'm paying four different people," he said. Before the new APIs, the service would require users to make each payment as its own transaction.

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