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IDG News Service - PayPal Inc. is providing application programming interfaces (API) to let third-party developers and merchants build applications that integrate with its online payment system, the company announced Monday.

The four APIs use open standards for Web services such as Simple Object Access Protocol and Web Services Description Language.

With this move, PayPal expects to lure advanced technical developers and enterprise customers to its system, said Dave McClure, senior manager of the merchant services business unit at the PayPal Developer Network. "The APIs open up PayPal functionality and a more advanced set of services," he said.

Mountain View, Calif.-based PayPal is looking to expand its user base from its core audience of individuals and small businesses, which make up the bulk of its 45.6 million registered accounts in 38 countries. The total value of transactions handled by PayPal in the first quarter of 2004 was over $4.3 billion.

"This is big news. It opens up whole new markets for PayPal," said Avivah Litan, an analyst at Stamford, Conn.-based Gartner Inc.

For example, PayPal will now be able to offer its payment services to companies that enter into subscription-type billing arrangements with customers, arrangements that require recurrent payments, Litan said. Previously, PayPal wasn't set up to cater to this type of client, such as providers of digital content. So far, credit cards have been the main method for paying for these services, but if PayPal can lower the cost for the content providers, it will make inroads into the market, she added.
PayPal will also be able to serve as a provider of electronic fund transfers, handling, for example, the transmission of salary payments to a company's employees and competing head-to-head against banks, Litan said.

The adoption of open standards for Web services is making it easier for third-party developers to take advantage of the APIs from companies such as PayPal, said Jason Bloomberg, a senior analyst at ZapThink LLC in Waltham, Mass. Without open standards, a company would expose an API and would have to provide a tool kit for developers along with it, which makes the process more cumbersome, he said. "Open standards make it more straightforward to take advantage of APIs and opens them up to more people," Bloomberg said.

The four PayPal APIs are:

• TransactionSearch, for retrieving basic details of a transaction


• GetTransactionDetails, for retrieving all details of a transaction


• Refund Transactions, for reversing a transaction and triggering a refund


• MassPay, for automatically transferring funds to one or many recipients

All but MassPay are available now. MassPay is expected to be available next