Online payments blizzard looms as PayPal APIs launch

Beverley Head
Thursday, 08 October 2009 03:50

IT Industry - Development

For the banks this represents yet another assault by PayPal on their traditional business. Speaking earlier this year at an AMP organised conference which explored the future of banking and financial services, James Gardner, who heads a 150 strong innovation and research group at UK based bank Lloyds TSB, noted that banks had been caught out by the growing popularity of PayPal.

He said that that bank CEOs needed to develop the equivalent of a ‘canary in a coalmine’ which could alert them to potentially lethal new competitors such as PayPal which banks did not recognise as a serious competitor until it had already secured a significant slice of the payments pie. Dr Gardner predicted that by 2010 PayPal could be handling 30 per cent of the world’s online transactions.

“They are all asking ‘how exactly did we allow this to occur?’” said Gardner who suspects there is no longer a competitive response available to banks seeking to ward off PayPal. Initially dismissed as a geeky solution, the banks continued to ignore the company as it forged relationships with credit card companies, even when it launched its own card, and then when it launched a mobile banking platform. It was only when PayPal secured a UK banking licence in 2007 and more account holders than any other financial institution in the world that it became impossible for banks to ignore.

With the seeding of a whole new raft of third party e-commerce applications using the PayPal payments platform its status as the leading international payments platform will be further cemented.

Anwar said that already 50% of PayPal’s business comes from areas other than eBay transactions.

PayPal Innovate 2009 is the company’s first standalone developer conference and will be held in San Francisco on November 3 and 4 where the APIs will be released to attendees.

The company is also expected to make an announcement regarding Java, detail its plans in the mobile payments space, outline how different devices can be used to make payments, and also how PayPal can be used in an online and offline mode.