Paypal API: creating a universal wallet

PayPal is the most popular payment provider in the internet. Last week, they announced their PayPal API for 3rd party developers, turning PayPal into a universal wallet system.

The new brand for the PayPal API is "PayPal X". Yes, they even acquired the domain http://www.x.com for this. To demonstrate that they really mean business with their API, Paypal lowers their fees significantly for transactions performed over the API.

Now, what is this API all about? Most importantly, it will allow applications to integrate the backend functions of PayPal without having to deal with the frontend. Paypal not only provides a payment system, but they also link shopping cart and identity management to that. In the past, webmasters and application builders had to redirect their users to the PayPal website to complete a transaction. With the API, users can be kept on site and site-specific data can be stored with PayPal through the API. This enables scenario's that were not possible before.


One scenario is where you design an iPhone application that allows the user to order a product from within the application. With the "DoDirectPayment" you can now process this transaction without ever leaving the application. The iPhone is only the first platform to support this Mobile Payment API. I hope that Android, Windows Mobile and Symbian will be next on the list.

Another scenario is where you want to build a webshop in an existing website. Often, this means having to choose between fundamentally changing the site by installing a new shopping cart application (like Magento) or delegating shopping cart management to PayPal by linking every "buy now" button to the Paypal shopping cart on their site. Today you can use the functionality of this PayPal shopping cart (enriched with e.g. stock management) whilst keeping the customer on your website. If you want, you can easily add a widget that gives the customer an overview of his shopping cart.
The examples clearly show that the API turns PayPal into much more then just a payment system. They now fill the same gap in the market that dedicated "hosted shopping cart" systems like http://www.ecwid.com are offering.

With this API, a new era has begun for internet payments. PayPal can now concentrate on their core business: securing and enabling transactions. Developers can create innovative applications that rely on a secure and trusted partner for transaction handling.