PayPal is planning to to open an app store where developers can offer their wares later this year.
Developers have a big opportunity to offer applications for merchants and consumers that PayPal doesn't have the interest or resources to build itself, a PayPal official said.
"It could be an invoicing application for a merchant or a 'daily deals' application for consumers," said Osama Bedier, vice-president of PayPal's Platform Business Unit and Emerging Technologies.
Last year, eBay did a similar thing, turning its Selling Manager suite of merchant tools into an open repository and storefront for externally developed applications.
The app store plans are the latest step in PayPal's aggressive strategy to lure external developers after the company opened its payments platform late last year.
"We have a huge emphasis on interacting with developers. They're our customers, along with consumers and merchants," Bedier said.
"We want to help these guys become successful. It's not just a matter of 'Here are our tools, go and use them.' We have to be where they are and be active in the developer community.
"I want developers to think of PayPal first whenever they hear the word 'payments' and I want to know what it will take to get there. We're willing to do it. We're willing to innovate and experiment on their behalf and hear their feedback."
Moving beyond conventional e-commerce
For years, PayPal was content to have developers link its payment system with external websites for checkout functionality. It no longer considers that good enough.
For starters, PayPal wants to expand beyond conventional online commerce. Bedier said e-commerce transactions make up only about four percent of US retail spending.
With smartphones, PayPal sees a future in which its system can be used to pay at the supermarket, the cleaners, the petrol station, and for things like rent and parking meters, he said.
"This is why this opportunity is so gigantic," he said. "There's a lot of opportunity in breaking out of the shell of e-commerce."
Mobile Payments library
PayPal is doing a limited beta test of its Mobile Payments library, which is designed to let developers add payment functionality to iPhone applications. The library will later be extended to other smartphone platforms.
"We want the simplest way to make payments available on mobile applications," Bedier told IDG. "We want, with a few lines of code and a few minutes, to let any developer put payments inside the app."
"The wallet should live in the cloud," he added.
"This stuff goes mainstream when we make it easy, simple, and solve the friction problem. Entering credit card information into a mobile device is the worst user experience ever."
PayPal has a sense of urgency about this, as it sees mobile payment transactions rising rapidly on its platform, even when users have to exit an application and access PayPal externally via a mobile browser.
Bedier acknowledged that prior to opening up its payments platform late last year, "we weren't innovating, we weren't changing the game, we weren't increasing the e-commerce pie" - for itself and for external developers.
"By giving developers the raw tools we've had internally, they can now extend us to other real-world use cases that have never been factored into e-commerce before," he said.
"With mobile blurring the line between online and offline, these opportunities have become reality."
See also: eBay's PayPal goes down for over an hour