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PayPal opens up platform to developers

EBay company and alternative payment option PayPal has announced plans to open its platform to third-party developers, allowing them to embed the PayPal payment system into their applications and platforms.

“Until now, developer innovation has been stifled by the barriers payment systems impose,” said Scott Thompson, president of PayPal, in a statement. “With an open platform, we’re solving fundamental challenges people face when trying to pay or get paid and giving people the tools to create new business models for their innovations.”

Online payment methods such as PayPal and eBillme have been around for a while, but have traditionally accounted for only a small percentage of transactions. This is beginning to change thanks to escalating credit card fees. Alternative payment methods will represent an increasing percentage of overall retail dollar volume, increasing from 18% in 2008 to 31% by 2013, according to a study last year from Javelin Strategy & Research. The trend toward alternative payment methods is most pronounced online.

EBay’s payments business unit had a strong second quarter. In the company’s results that came out earlier this week, the payments business unit reported revenue totaled $669.3 million, an increase of 11% year over year. Net total payment volume for the quarter increased 12% for a total of $16.71 billion. This growth was driven by continued momentum in PayPal Merchant Services and the integration of Bill Me Later, which eBay acquired in the fall. Active registered accounts reached 75.4 million, an increase of 20% year over year.

In opening up the PayPal platform, eBay hopes developers will give merchants and consumers new ways to send and receive payments for services beyond traditional e-commerce.

A pilot program is underway, with several developers having already integrated PayPal’s new APIs. These include Twitpay, a Twitter-based payment service; LiveOps, which has an on-demand workforce service called LiveWork; and Microsoft’s Windows Azure platform, which is a cloud development environment.

Anyone with ideas for innovative and interesting ways to pay in the future can submit them to PayPal via Twitter @changehowwepay and can view responses at Changehowwepay.com.

PayPal will also hold its first-ever open platform developer conference PayPalX Innovate 2009 in San Francisco in November.

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