PayPal Open Platform to Ignite Innovation

Managers and employees at Internet payment giant PayPal envision a future in which cash is an obsolete form of currency. We will order drinks through a touch screen at a bar and buy movie tickets by touching a movie poster on the side of a building. In PayPal’s forward-thinking future, software developers working for other companies will be able to create these alternative ways of purchasing the products we want by using PayPal’s technology. These visions of our possible future got a lot closer when PayPal announced that they would open their platform on November 3 to developers who want to build payment applications.

While innovations in many other industries have changed the way we live, work and play, there has been significantly less innovation in new and alternative means of making online payments. PayPal President Scott Thompson said as much recently at the Web 2.0 Summit in San Francisco. He said that the industry has been resistant to change, but legitimate concerns about fraud and security have been the largest impediments to innovation in the field. He also said that payments are a highly regulated business and require a great deal of cooperation and coordination between senders and receivers.

Still, “there’s a clear sign in the market that people want something better than they have today,” Mr. Thompson said. “Cash and checks are dying a slow death.”

PayPal, an integral part of Internet auction giant eBay, has primarily been driving the growth of the popular auction site. Now, the company is keenly interested in becoming the way that people pay for everything online, on their cell phones and in the course of their daily lives. Mr. Thompson said that the company has been working with software developers at big hardware and software companies, start-ups, mobile telecommunication device manufacturers and other companies. “Payment innovation needs to move from the hands of a few big entities to the hands of many,” he said.

He said that when software developers gain access to PayPal’s technology, they might build something as simple as a means to send money to a friend over a social network or something as difficult and complex as a payroll system for multinational companies with employees all over the world.

Blackberry maker Research in Motion has been using PayPal technology in a pilot program that allows the company to collect payment from Blackberry users when they purchase applications from the company’s app store. Twitpay, which allows Twitter users to transfer money using Twitter, has also been using PayPal technology to run their service.

“The point is, anyone can make a payment on almost any device or system, whether it’s a mobile phone, a PC or even the television in your living room,” Mr. Thompson said.

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