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Jul 07
2009
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PayPal Adaptive Payments - a flexible payments API from PayPalPosted by: Dave on Jul 7, 2009 Tagged in: web development , PayPal , payment processing , online payments , micro-payments , e-commerce , Amazon Payments
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PayPal have confirmed they will be releasing a new flexible payments API called PayPal Adaptive Payments Service. TechCrunch posted a leaked confidential document that details the service. PayPal have confirmed it is true on their official blog and also gave details of a limited-seating event on July 23rd where they will be revealing more details. They also announced there will be a larger conference in November specific to the Adaptive Payments Service.
This 63 page document introduces the features provided by the adaptive payments service and details the operations provided by the API to integrate with your application. The API introduces 2 new payment types and also provides support for micro-payments.
The Adaptive Payments Service will support 3 types of payments -
Simple Payments
This is a traditional type of online payment where a sender sends a single payment to a single receiver.
Parallel Payments
A parallel payment is a payment from one sender that is split directly between multiple receivers. The number of multiple receivers is limited to between two and six receivers. The sender will know who the receivers are and will know the amount of money that is paid to each. This type of payment could be useful on portal sites such as those aimed at the tourism sector where you might purchase flights, accommodation and car hire on the one site. The customer can make one booking, make one payment and have PayPal handle the rest. Although I am not sure if these types of sites are likely to take Paypal as a payment method? It could also be useful on e-commerce sites that use drop-shipping that is transparent to the user. I think that the key point here is that the receivers involved and breakdown of the payment is transparent to the sender.
Chained Payments
A chained payment is a payment from one sender that is indirectly split among multiple receivers. The payment is received by a primary receiver who then passes part of the payment to the other receivers. These are referred to as secondary receivers. You can have one primary receiver and between one and five secondary receivers. The sender will only deal with the primary receiver and will not be aware of the secondary receivers or of the amount of money that is paid to each receiver. I think this type of payment will be very popular with application developers and e-commerce sites. I think the fact that the secondary receivers of the payment is not transparent to the sender will mean developers will come up with lots of innovative sites and applications to use this technology.
There is no pricing information available at present as the document published by TechCrunch is a leaked confidential document. The adaptive payments service is already being compared to Amazons Flexible Payments Service (FPS) as it supports micro-payments and aggregated payments which provides the same functionality as PayPal's chained Payments.
Once again we are seeing how competition in the area of online payments is encouraging providers to come up with innovative services and pricing solutions. I think the PayPal Adaptive Payments API will be popular with developers as it will allow developers to easily monetize their applications and websites.
Dave
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Related Blog Posts:
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written by Bryan Johnson , July 25, 2009
I think the big story in all of this is the following: the major Card Brands such as Visa, MasterCard, American Express and Discover have done an exceptional job over the years building a global network of cardholders and accepting merchants to facilitate commerce. It’s now a global standard. They have built substantial barriers to entry for others (look at Revolution Money who has raised around a $100 million to try and penetrate the U.S. market).
Collectively, the internet, globalization, social networks, and mobile phones have been shifting the payments landscape and reducing these barriers. It’s the wave that Paypal and other innovators have been riding and has turned what was a potential threat and minor scratch for the Card Brands into an open wound.
http://www.braintreepaymentsolutions.com/blog/PayPal-Adaptive-Payments/
written by dave lowry , July 27, 2009
Hi Bryan
You raised some interesting points in your comment and also on your adaptive payments Blog post. I'm not sure I agree with you 100%. Firstly as you said the major card brands have done an exceptional job building a global network of cardholders and accepting merchants to facilitate commerce. The key word in the above sentence is "commerce". They built the network for commerce not for e-commerce. Overtime they have adapted this network to deal with e-commerce but it still suffers from problems as it was not designed for the customer not present environment.
The innovations from PayPal, Google Checkout, Amazon Payments and Facebook Payments are a threat to the Card Brands in terms of e-commerce but the network of cardholders and merchants will remain strong for customer present transactions. Also behind payment methods such as Facebook Payments. Google Checkout etc. customers will continue to use their credit cards to power these accounts. So the Card Brands will still be indirectly involved in the e-commerce transactions.
Dave
