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PayPal's CEO John Donahoe thinks that online payments should make up more than 20% of the global payments market, but right now it only accounts for a fraction of it. One of the ways PayPal is working to change that: courting developers.
The company's Adaptive Payments API was launched in November 2009 at the PayPal Innovate X 2009, and since then, PayPal has recruited thousands of developers and seen millions of dollars transacted using its developer platform.
But for developers, accepting payments through the Adaptive Payments API had a major downside: users were required to sign in or sign up for PayPal account. But not all developers liked that. So PayPal, listening to developer feedback, announced yesterday that it has launched Guest Payments:
Our developers asked for an easy way to accept credit cards using our Adaptive Payments API and that’s why I’m excited to unveil Guest Payments today. Guest Payments allows developers to collect credit card payments without requiring their customers to open a PayPal account, eliminating the complications merchants, developers and startups face in accepting credit cards.
Although this seems like a small move, it's an important one for PayPal. In making it, PayPal had to weigh competing interests: boosting the PayPal brand (and user base) versus giving developers the ability to build payment experiences with less friction. If it's going to capture a larger piece of the global payments pie, in part using developers, PayPal has to be less concerned about its own relationship to the consumer and more concerned about making sure its platform is being used to accept as many payments as possible. In letting developers build apps that don't require users to create a PayPal account to pay, it's clear that PayPal understands that.
This offers a good case study for other companies that operate popular platforms, including Facebook and Twitter. In many cases, companies find themselves conflicted: they want to be a 'platform', but they also want to maintain a certain relationship with the consumer. Doing both can be a tricky balancing act, and at some point, many of these companies will have to make a strategic decision: have the cake, or eat it.