This is beginning to look like a new digital market battleground. PayPal's spoken up, in the wake of MasterCard's opening of its API to app writers, to tease its future smartphone payment skills. With Visa in the war too, things could get feisty.
In a post yesterday on PayPal's official blog, its senior director Damon Hougland has responded very personally to MasterCard's maneuver, indicating that PayPal sees MasterCard's interest in enabling its own brand of smartphone (or Web-based) payment systems as a serious threat.
Hougland's post is titled "PayPal X Developers Drive Innovation," which indicates how much PayPal wants to seize the collective imagination in this matter—reminding everyone that it began to go down the open API path some time back, and that MasterCard's plan is merely to "follow in our footsteps." This much is true—PayPal has had its PayPal X ("the first open global payments platform with functionalities specifically based on developer needs") available for use for over a year. According to PayPal "hundreds" of apps have made the most of this, thanks to the efforts of "thousands" of developers, transacting "millions" of dollars through PayPal's systems in this new Web 2.0 way. In particular, Hougland highlights Bump—a neat information-sharing app for iPhones, designed to swap contracts, but also able to transfer money when users "bump" their iPhones together.
Hougland goes on to tease us with data on what PayPal's got coming in this area, and it's pretty big: "Next month we'll offer our developers the ability to collect credit card payments from within their PayPal X based application, eliminating the complications merchants, developers and startups face in accepting credit cards." This sounds like a serious effort at streamlining in-app purchasing for app developers keen to sell products, real or digital, or services through their apps. It's certainly similar-sounding to some of MasterCard's tech, and it may even be more powerful—PayPal won't have to have quite so many security loopholes to leap through before enabling developer access inside its code.
All of these moves, from Visa, PayPal, and MasterCard are coming in the wake of excitement in the mobile payment's market stirred up by "disruptive" tech like the new Square dongle and app, Apple's reinvigoration of the micropayments game as a side-effect of the launch of the iPhone, and (to a lesser extent) Apple's huge list of patents for future tech in this domain. It looks like the old guard—which includes PayPal,if you're being honest—is trying to wake from its slumber before the digital payments market slips out of its grip.