Corporate America Discovers Payments - Digital Transactions

Trends & TacticsTrends & TacticsPayPal’s Ploy to Ramp up InnovationSay you’re a processor and your parentcompany has told everyone thatits plan for you is to double your sizeover three years. Say that goal is atleast partially dependent on researchand-developmentdollars, which arelimited. What do you do?If you’re PayPal Inc., and yourparent eBay Inc. set such a goal, youharness the vast community of developerswho toil away writing code tomake transactions work on your platform.It’s an approach that has workedwonders for Apple Inc. Consider thetens of thousands of apps conceivedby developers and now available onApple’s wildly popular iPhone.Last month, PayPal did an Apple,sort of. It formally opened its globalpayments platform, christened PlatformX, to developers with a showytwo-day conference and coming-outparty in San Francisco. With an arsenalof application-programming interfaces(APIs) already in hand, PayPalhopes to unleash a tide of innovationby inviting developers to useits engine. “What these developersare doing will supplement our R&Dspend,” Scott Thompson, PayPal’spresident, said at a news conferenceduring the show.6 digitalDecember 2009It’s a strategy that Amazon.comInc., the online-retailing giant, hasalready adopted for its payments initiatives,which many see as competitivewith PayPal. But when it comes tobeing a brand in e-commerce paymentprocessing, PayPal with its 78 millionactive registered users is still the one tobeat, a fact many merchants and banksrecognize. With off-eBay merchantsnow accounting for 56% of PayPalPayPal’s Growth(Figures in millions)volume, more banks and merchantsmay come to the same recognition.“People understand what PayPalis,” says John Schulte, senior vice presidentand chief information officer ofMercantile Bank of Michigan. Schultelooked at a variety of person-to-personpayment technologies for his bank, andsettled on PayPal. “The timing workedout right that they were opening upthe platform,” he says, noting that customerdemand for P2P is building.Early next year, the bank, withits vendor S1 Corp., will start usinga PayPal API to offer P2P paymentsvia mobile phones. Another user isFidelity National Information ServicesInc., which will introduce a P2Pservice based on online-banking, alsoearly in the new year.Christian Taylor, who was at theSan Francisco conference, is all overPlatform X. His startup, Payvment.9/30/09 9/30/08 % IncreaseActive accounts 78 65.3 19%Transactions 273.9 214.5 28%Payment volume $17,686 $14,812 19%Note: Accounts include Bill Me Later accounts. Transactions and payment volume include Bill Me Laterbut exclude PayPal’s gateway business.Source: Company reportscom, has created code that lets anye-commerce merchant create a shoppingcart for free. But this shoppingcart is networked with all other merchantsusing the same cart, so thatconsumers can put items in it froma variety of places, including storefrontson Facebook, and then pay forit all with one checkout. A PayPal API