One of the remarkable changes over the last year and more in payments has been the perhaps obvious insight of PayPal that software developers represent an enormous source of payment transaction acquisition. To date, some 50,000 have signed up for PayPal’s Adaptive Payments initiative and hundreds of applications have been written.
This blog entry expresses PayPal’s view of payments as an embedded function of a larger transaction context and takes a swipe at the “closed” card networks. There’s no doubt that its vision of embedded payments is spot on. Just don’t lose sight of the fact that Adaptive Payments exists to gain more volume for PayPal. It is an acquiring play.
The success of the first generation of payment solutions came from the facilitation they provided between consumers and merchants: Consumer could more easily access their funds, merchants received a more reliable form of tender. Thus commerce grew.
Today’s consumers and retailers have far more evolved needs. To permit version 2.0 of commerce, new friction points have to be solved, which require a version 2.0 of payments. The potential for creating value by reinventing payments in concert with commerce is enormous.
In the first year, PayPal has seen thousands of applications built using the PayPal X platform, but this is just the beginning. The coming weeks and months will show how we help transform the application of payments.
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