PayPal Opens Up And Gets CheaperPayPal Opens Up And Gets Cheaper

At PayPal's inaugural developers conference here in San Francisco, PayPal reiterated its commitment to opening up its technology platform and backed up the promise with new and improved APIs and significant cuts in the prices it charges to process payments. In the long run, this could mean new ways for small and midsize companies to charge customers and even pay their own bills.PayPal used PayPal X Innovate 09 to signal upgrades and general availability of the "couple dozen APIs" it began beta testing in July as part of its Adaptive Payments program.

New features include Currency Conversion; Pay Anyone that lets financial institution customers send money when logged in to their bank accounts; and Pre-approvals that lets create reusable payments agreements between buyers and sellers. Cost Cuts Can't Hurt Just as important, PayPal announced new developer pricing in hopes of making its services more attractive compared to existing payment options. "Cash is dying a slow death," claimed Osama Bedier, PayPal's vice president of platform, "except for tooth fairies, drug dealers and senators paying their household staff."

The problem is that "3% doesn't cut it" when you're trying to displace cash and checks, Bedier said, referring to PayPal's standard rates of 1.9% to 2.9% of the total purchase, plus $.30 per transaction. So the new pricing on services calls for payments of $.50 or .75% on transactions funded by bank or PayPal balances. Micropayments will cost $.05 and 5% of the transaction. Person-to-Person (P2P) payments will be free.

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PayPal also announced a mobile payment software development kit (SDK), designed to help developers to integrate PayPal into mobile applications -- adding a checkout button to accept mobile payments without having to collect financial information, for example. The mobile SDK will be available for the iPhone in the first half of 2010, with other platforms to follow.

But PayPal president Scott Thompson said it was important that mobile capabilities come as part of a larger solution. "We don't need a mobile wallet and a PC wallet and a TV wallet," he said. "There is just one wallet, and it lives in the cloud."

Will It Ever Help SMBs? It all sounds good, and 1,500 eager developers and price cuts certainly can't hurt. But small and midsize companies have heard promises about online payments before, and somehow they haven't quite panned out. Tens of millions of people use PayPal, but it's hardly gone mainstream.

Even Thompson acknowledged that "innovation hasn't kept pace with the opportunity. Consumers and merchants are demanding a better way. They don't want to be nickled and dimed any more."

PayPal is owned by eBay, and eBay CEO John Donahoe said he planned double the size of PayPal in three years via expansion into three key areas: mobile, micropayments, and B-to-B (see above!), as well as "new places we can't even imagine.

"I believe PayPal will be bigger than eBay," Donahoe said, because it will become the leading online payment network and "power the global economy."

And he's counting on technology to make it happen. eBay has never been known as a technology company, admitted Donahoe. But he claimed that he's "put the tech people in charge" of PayPal and given them "an unlimited budget" to "make us a more technology-driven company."

eBay CEO John Donahoe tells PayPal developers "Let's get this party started!"

Let's hope it works. Whether it's PayPal or some other outfit that finally makes online payments seamless, effective, fast, convenient, secure, affordable, ubiquitous, and easy -- no matter where the transaction is taking place or how large or small it is -- these capabilities are essential for helping smaller companies make the most of e-commerce.

Today's announcements, and some slick demos, offered hope, but it'll be years before we know whether this big, complex problem has actually been solved.

More information is available at PayPal's new developer portal PayPal X (www.X.com).

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