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PayPal was the bright spot in eBay's third quarter earnings. The company, whose name has become synonymous with online payments, boosted the online auction company with its strong continued growth.

And if the company has its way, that growth won't be stagnating anytime soon. At the Innovate 2010 developer conference yesterday, PayPal made it clear: its future is micropayments and mobile.

PayPal's new PayPal for Digital Goods is designed to let publishers finally cash in on paid digital content without having to give up a hefty portion of their revenue where small transactions are involved.

PayPal's press release describes PayPal for Digital Goods as "a new in-context, frictionless payment solution that lets consumers pay for digital goods and content in as little as two clicks, without ever having to leave a publisher’s game, news, music, video or media site." Publishers pay just five cents and 5% of the transaction value.

Initial partners using Digital Goods are Facebook, the world's largest social network which is aggressively moving into the virtual currency business, and FT.com, one of the few major news publishers with a successful paid content model.

Removing the friction and cost involved in digital goods micropayments certainly provides big opportunity for PayPal. But an even bigger opportunity exists in the mobile payments arena. And there too, PayPal had some major announcements.

At Innovate 2010, PayPal unveiled a number of mobile initiatives, but perhaps the most intriguing was its partnership with Appcelerator, which provides developers with tools for building cross-platform mobile apps:

Appcelerator has signed a mobile partner program agreement with PayPal to offer a fully integrated mobile commerce offering called Titanium+Commerce to over 8 million PayPal merchants in the first half of 2011. Titanium+Commerce, available in beta starting today, makes it easy for any merchant to rapidly build cross-platform mobile applications that harness a full set of commerce capabilities using existing Web skills and technologies. Merchants and online businesses can rapidly extend into mobile commerce by enabling the purchase of real and virtual goods, services, and content from smartphones, tablets, connected TVs, and other devices.

Appcelerator says that Titanium+Commerce is designed to tap into the "trillion dollar mobile commerce opportunity" and a video demonstrating its capabilities, embedded below, is summed up best in one word: impressive. Which is probably one of the reasons why PayPal's parent, eBay, is participating in a $9m funding round for Appcelerator.

The question now, of course, is how this all plays out. A viable platform for micropayment transactions could have a significant impact on the market for paid content, as publishers may have the ability to create more attractive business models and product offerings.

And as mobile commerce dreams finally become reality, there may be significant disruption in the mobile space as dominant companies like Apple grapple with how to maintain control of their ecosystems as third parties cash in using external payment solutions.

Photo credit: digitaljournal.com via Flickr.

Patricio Robles

Published 27 October, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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