We’re at PayPal’s much-hyped PayPal Innovate X 2009, the payments company’s first dedicated developer conference. PayPal, which reported strong earnings recently, is hoping to engage developers in producing applications on top of PayPal’s newly released API. eBay’s CEO John Donahoe said this morning that PayPal is set to be bigger than eBay in the near future, forecasting the payment company’s continued growth and dominance in the space. We reported on parts of the open platform here and here. PayPal is already testing the platform with startups Payvment, FundRazr, Lottay and TwitPay. PayPal is officially opening up its PayPal X platform to developers and will be presenting a roadmap for its view of the future of payments.

Here’s a comprehensive list of the Adaptive Payments APIs that PayPal is releasing today. Adaptive Payments are the first suite of APIs that are part of PayPal X’s open platform. I’ve also embedded the full list of APIs that will eventually be available on PayPal X below.

1. Currency Conversion: Fast and easy global payment apps, automatically converting currencies using current exchange rates.

2. Pay Anyone: For financial and other institutions to let their customers send money when logged in to their bank accounts. Their customers won’t need a PayPal account to use the service.

3. Pre-approvals: Enables developers to create reusable payments agreements between buyers and sellers. While payment approval happens online, the actual money movement can occur offline at different intervals, and through multiple devices that are not necessarily Internet-connected at the time.

4. Send Money: Developers can build person-to-person (P2P) solutions or business-to-business (B2B) payment applications on their platform of choice – whether it’s the mobile phone or a social networking site.

5. Chained Payments: Developers can take a cut or distribute funds from PayPal payments as they happen.

6. Parallel payments: Developers can enable buyers to send money to several people in one payment, which is ideal for purchasing multiple items from different sellers, or even for payroll applications.

7. Adaptive Accounts API: Provides a streamlined signup experience for people who don’t have PayPal accounts, while maintaining security and privacy of consumer data. With the new API, developers can create PayPal accounts for their customers from within their applications.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Today is the first day of PayPal’s much-hyped PayPal Innovate X 2009, the payments company’s first dedicated developer conference. PayPal, which reported strong earnings recently, is hoping to engage developers in producing applications on top of PayPal’s newly released API. We reported on parts of the open platform here and here. PayPal is already testing the platform with startups Payvment, FundRazr, Lottay and TwitPay. PayPal is officially opening up its PayPal X platform to developers and also unveiling additional APIs at the conference and will be presenting a roadmap for its view of the future of payments.

Taking the stage this morning for the keynote address is PayPal’s senior director of PayPal’s developer network, Naveed Anwar. He says that PayPal X, the new platform, is officially open. PayPal moves over $2200 dollars per second. John Donahoe, eBay’s CEO, takes the stage next. He says that this is an important marking point in the company’s history. The bottom line message is that working together with developers to unleash the next wave of payments technology. Donahoe admits that eBay was not know as the a bed of innovation but saw the opportunity in PayPal. Marc Andreessen has been a huge part of technology playing a growing role at eBay, says Donahoe. PayPal was given an unlimited budget to hire talent and develop key innovations.

Online payments only represent 5 percent of payments worldwide, Donahoe thinks that online payments should be higher than 20 percent. He believes consumer behavior with regard to payments will change radically in the next few years. This year the eBay app on the iPhone will do $500 million in volume, with PayPal integrated in the payments system. He says he thinks PayPal will be bigger than eBay in time, which he has said before. He wants to double PayPal’s reach in the next two years. The developers are a critically important part of PayPal’s future, with the company’s role to provide robust platforms, such as PayPal X.

Scott Thompson, PayPal’s president now takes the stage. Thompson says cash is obsolete. PayPal has been successful because the company has met customer needs for a safe secure, way to pay online. Thompson says the industry has been slow to embrace payment technologies, not because the ideas were bad but because it’s a very complicated issue.

Today, PayPal opens up its platform, called PayPal X, to all developers. X was originally PayPal’s API platform in its early days. There are more than 78 million active PayPal account in nearly 200 international markets. Thompson says that that there is a lot of opportunity in the mobile space, specially in India. But PayPal has further ambitions-to become the “wallet” that transcends across mobile, computers, and more.

Vice President of PayPal platforms, Osama Bedier, also takes the stage, says that PayPal will complete transactions valuing $70 billion dollars, which is pocket change compared to the $30 trillion that consumers spend globally. Bedier says PayPal will be introducing new APIs and pricing models.

The Adaptive Payments API is the easiest way for developers to move money. Developers can build applications including pre-approvals, currency conversions, and pay anyone, chained payments and parallel payments. PayPal is also launching Adaptive Accounts, another API that lets developers develop applications that let users just enter their PayPal username and password. PayPal is also unveiling a pricing model. The model is a $0.50 cents flat free per transaction or 0.75 percent of transaction depending on user cases.

And PayPal is even gaining traction from large tech companies to integrate the new API. This morning, Sun Microsystems announced a partnership with PayPal to support for-fee applications submitted by developers for distribution in the Java Store. Utilizing the new Adaptive Payment API from PayPal, consumers can authorize the Java Store to bill against their PayPal account so they can simply click the “Buy” button and never have to leave the store. In addition, when a customer makes a payment in the Java Store Beta, the application owner also gets paid at the time of the purchase. This way, the developer immediately receives the revenue and knows exactly how many people have purchased their application. Microsoft Azure is also integrating PayPal’s new API in its offerings.

PayPal is also seeing adoption across social networking sites growing 20 percent, month over month. Payvment, a shopping cart web service that we wrote about here, is using PayPal’s API on Facebook. Payvment lets anyone set up e-commerce retail stores on Facebook, using PayPal’s Adaptive Payments API.

ShopSavvy, which makes apps for the iPhone and Andoid, which allows users to scan a bar code and then gives you a list of pricing of the items on different e-commerce sites. Now the app is using PayPal’s API to let users buy the product they’ve scanned from a website (without having to go to the e-commerce site) directly from within the app.

And in it’s own Oprah moment, PayPal announced that it was giving away netbooks to everyone in the audience of the conference. Google made a similar move at their developer conference, giving away free Android phones.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

It’s simple stuff. You set up a unique phrase like “Axe Murderer” or “Car Lover” or “Honey I shrunk the kids” and tie it to a 4-digit PIN. This is linked to your Amazon account which, of course, is pre-loaded with your credit card and shipping address.

I do have to wonder what was so hard about entering an email address and password, but clearly Amazon’s psychological research unit thought “Fluffy Bunnies”, or some such, was going to be easier for the average Jane or Joe to remember.

It’s also positioned as a parent/teen solution competing (kind of) with PayPal Student Accounts, because, like the latter, you could give your student son or daughter a PayPhrase which access your account which doesn’t actually access your account controls. PayPhrase lets parents track spending and set account permissions/alerts/etc.

There are other participating websites which will be implementing PayPhrase, including DKNY.com, Jockey.com, and Buy.com that already accept by Amazon’s Checkout service. Of course, earlier this month, eBay came up with its Bill Me Later deferred payment option for both eBay and PayPal which will be carried by Toys R Us, Zappos.com, Petco and Wal-Mart among others.

However, how many people are not going to have a cutesy phrase and default instead to something like “Dad’s Birthday”. All you then need do is type in a plausible month and day like “0820″ for the PIN and… voila! And how many people will just use “1234″ for their PIN? Plenty.

What do you think? Leave your thoughts in the comments.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

In an effort to compete with Amazon’s Flexible Payments API, PayPal recently announced its version of the API, called Adaptive Payments (which we scooped over the summer). PayPal’s API gives developers full access to PayPal’s features, allowing them a lot more freedom in building applications, which includes the ability to accept and distribute payments. Over the course of the past few month, PayPal has been working with several startups as part of a pilot program to show the capabilities of the API in anticipation of a broader rollout in November. Payvment, which powers online shopping cart technologies and uses PayPal as a payment mechanism, is launching a potentially revolutionary new Facebook app that would let anyone set up a retail storefront on Facebook.

Payvment was originally developed as a web service that would allow any site owner to integrate a shopping cart into their e-commerce offering. You can add the technology to your site by simply adding one line of code to the site. Payvment’s Facebook App is more comprehensive and lets anyone create a retail store on Facebook. The app lets you set up products, categories of products (i.e. shoes, T-shirts, sweaters), import photos, list terms of service and shipping options and more. Once you set up your online shop on Facebook, it will show up in a separate tab on your profile or page under “storefront”.

Once the shop is set up, potential buyers can interact with the storefront like they would a -commerce site. You can add desired products to your cart and remove them easily. Payvment also lets buyers conduct searches within the store. When a user adds a product to their shopping cart on Facebook and clicks to follow-through on buying the product, Payvment takes the user to a separate page outside of Facebook, where the user can use PayPal to buy the object. Payvment’s CEO and founder, Christian Taylor, tells me that it is necessary to conduct the transaction on a separate site because Facebook doesn’t yet offer e-commerce security options. And any purchases made will not be made pubic to your friends.

Payvment’s shopping cart is also integrated with any other shop using its application. So if you put a shirt from store “x” in your cart and also placed a shirt from store “y” in the cart, both would show up on either retail site. Basically, Payvment creates a unified shopping cart across Facebook for buyers. Retailers with standalone sites who want to use Payvment’s shopping cart experience can also implement Facebook Connect, to let consumers access their personal shopping cart from Facebook. And retailers can customize their carts within their sites to fit into their UI.

Of course, there are ways to sell virtual goods on Facebook, including Facebook’s own payment system, and a few storefronts have already been popping up on Facebook, including apps for 1-800-Flowers and Sears. With these retailers, transactions are completed outside of Facebook, on the retailers page. Payvment adds to this functionality to by letting anyone set up a retail storefront for free. Taylor adds that this app will eventually be made available on other social networks. One of the draws of Payvment is that its code and Facebook app are free for the moment. So retailers don’t have to put any money up to set up their shopping cart and storefront.

Payvment, which will be launched to the public on Nov. 3 and PayPal’s Innovate Conference, seems like a innovative way to integrate social e-commerce on Facebook. It seems like a no-brainer for smaller retailers which don’t have well-established sites to create a revenue stream through Facebook. In fact, even larger retailers who have established e-commerce sites can feature and sell a select group of products within Facebook. And retailers, both big and small, are flocking to Facebook for marketing purposes, why not add the ability to buy as well? Personally, I’d love to see a virtual mall on Facebook with multitudes of retailers.

PayPal is smart to engage developers in the early stages of releasing this new API. The company also partnered with TechCrunch50 demopit startups FundRazr and Lottay to build off the adaptive payments API. In fact, PayPal’sPayPal X Innovate 2009 conference in November is designed to attract more developers to the platform. The new APIs will only be released to those developers that attend the conference. Although, we scooped the news of the new Adapative Payments API, PayPal says that additional APIs will be announced at the conference. It should be interesting to see what these APIs enable developers to build, considering the impressive vision PayPal has for the future.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Recently, PayPal announced its flexible payments API, called Adaptive Payments (which we scooped) gives developers full access to PayPal’s features, allowing them a lot more freedom in building applications, which includes the ability to accept and distribute payments.

PayPal is timing the official availability of these APIs with its PayPal X Innovate 2009 conference in November. According to PayPal, developer attendees will receive exclusive access to the new APIs that won’t be available to non-attendees until 2010. And PayPal will be unveiling its platform roadmap for the future, which should be interesting. We already got a little sneak preview of the PayPal’s future vision a few weeks ago.

Of course, it’s always helpful to see what developers can actually do with this new API to see it’s true power and connectivity. PayPal has been beta testing the new flexible payments platform with select developers over the past few months and it just so happens that two of testers are TechCrunch50 demopit companies.
FundRazr is a Facebook app that lets any individual, organizer or volunteer collect money on behalf of a social group, sports team, school club, charity, or campaign or. The startup is using PayPal’s Adaptive Payments API to process the transactions.

Lottay, another TechCrunch50 demopit company that is building its platform off of PayPal’s new API, lets you create an online gift that people can put money towards. Users can create gift pages on Lottay with detailed descriptions and pictures of a particular goal or gift and then friends can contribute to the site via PayPal.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Basically, this is PayPal’s vision for the future of payments. It reminds quite a bit of Mastercard’s “Priceless” commercials, but with a cool tech angle.

I want to be able to do everything this video is promising. Will that happen by the time the platform opens up on November 3rd? Nope. Will it happen anytime soon? Nope. But hopefully visions like this will inspire people to do cool things.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

There’s a mad rush of tips coming into us right now that PayPal’s online purchasing service is down for the count. While the site itself appears to be loading (though very slowly), numerous buyers and venders are reporting that sales are not going through. A quick scan of Twitter tells the same story. And it looks like it has been down for something like an hour and a half now.

[Update below, it looks like after something like 2 hours of downtime, the service is starting to come back.]

Here’s what PayPal is officially saying on its developer site:

EVENT DETAILS
——————–
Service: Live Site

During the time listed below you may have or currently are experiencing the following:
Buyers may experience error “Sorry – your last action could not be completed” on trying to login to www.paypal.com.
Payments via API are intermittently unavailable.

Affected Product(s):
- Website
- PayPal APIs

Start Time: Aug 03, 10:15 AM PDT (Aug 03, 6:15 PM BST)

End Time: On-Going

Our technical teams are working diligently to resolve the issue. We will provide updates until the issue is resolved.

We apologize for any impact caused by this incident.

Sincerely,
PayPal Merchant Technical Services

So there you go, both the main site and the all-important PayPal APIs are not working. Not good.

It will be interesting to see how PayPal follows this up. A lot of merchants undoubtedly lost a lot — and I mean a lot — of money today. When Rackspace had its recent failures, it noted that it would likely have to reimburse customers to the tune of millions of dollars. eBay, which owns PayPal, could be looking at a similar situation.

Update: As of noon PT, things are starting to come back online. Here’s the update from PayPal:

Update: This notification is to inform you that we have started recovering. Some intermittent issues remain which we are currently addressing.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

While Ebay’s Q2 earnings yesterday showed that its marketplace business was slow, the company’s revenue was boosted by continued growth in its online payments business, including PayPal and BillMeLater. Both businesses saw 11 % growth in revenue in the quarter, compared to a year ago, and saw a 20% increase in registered accounts from last year, with 75.4 million accounts. On the heels of this good news, today PayPal is officially announcing the launch of its flexible payments API, called Adaptive Payments (which we scooped a few weeks ago here). The new platform will officially open up to developers in November but will be accepting beta testers until then.

Basically the new API is designed to give developers full access to PayPal’s features, allowing them a lot more freedom in building applications which include the ability to accept and distribute payments. PayPal’s President Scott Thompson says that developers will basically be able to do anything they want off of the PayPal platform, emphasizing the “global connectivity” of PayPal (transactions can be conducted in 19 currencies). He says $2000 flows through PayPal’s system every second, 365 days a year. Thompson says that what differentiates this new innovation is the ability to maintain security, while still extending the API far from PayPal.

Very similar to Amazon’s Flexible Payments Service (FPS), the Adaptive Payments API handles payments between a sender of a payment and one or more receivers of the payment. Adaptive Payments allows almost the same functionality as FPS. The new API lets developers become a payment aggregator, which we are told is something against PayPal’s current Terms of Service. Amazon’s FPS also lets developers aggregate payments. Moreover, Paypal’s Adaptive Payments has built in micropayments support, another feature of FPS. PayPal says that they think they can be a viable micropayments vehicle, but won’t reveal more information about what the support entails.

Microsoft cloud computing platform Azure is also utilizing Adaptive Payments to let developers who are building applications using PayPal seamless integrate their applications with Azure’s platform. Microsoft is working with PayPal to help developers easily embed billing and payment functionality into applications built off Azure and will offer interoperability between Azure and Adaptive Payments.

Some of the offerings of Adaptive Payments are sure to be attractive to developers. In what PayPal calls “Chained Payments,” developers can create applications that enable a sender to send a single payment to a primary receiver who may keep part of the payment and pay other, secondary receivers with the remainder of the funds. For example, an application might be an online travel agency that handles bookings for airfare, hotel reservations, and car rentals. The sender sees only the travel site as the primary receiver. But that site could allocate the payment for its commission and the actual cost of services provided by other merchants. PayPal would deduct the money from the sender’s account and deposit it in both the primary travel site’s account and the secondary receivers’ accounts.

PayPal has decoupled the approval process from the transaction, giving sellers more flexibility of how and when sender approval process can take place. PayPal says that over the next year, they plan to unveil more APIs to encourage developer to build of the platform.

Adaptive Payments will also offer “Parallel Payments,” which would let a sender send a single payment to multiple receivers. An example of this type of application might be a shopping cart that lets a buyer pay for items from several merchants with one payment. The shopping cart would allocate the payment to the merchants who actually provided the items. PayPal would then deduct money from the sender’s account and deposits it in the receivers’ accounts. Michael Ivey, founder and CEO of TwitPay, a way to send money over Twitter, is using PayPal’s Adaptive Payments API. Off of TwitPay’s payments platform, you can pay multiple recipients in one PayPal transaction.

LiveOps, an outsourcing marketplace and platform, is using the Adaptive Payments platform for several months. The platform uses PayPal to invoice; money is dynamically routed to workers from businesses. LiveWork says the advantage of using PayPal is that there is no credit card or financial information stored on LiveWork, with security being completely outsourced to PayPal.

PayPal says that pricing for Adaptive Payments will be announced in November. It’s unclear if the plan will be competitive with Amazon’s FPS pricing. The launch of the new API and services should surely heat up the competition between PayPal and Amazon (which bought Zappos yesterday). Amazon now has Amazon Payments and the beta of FPS, which allows more flexibility for developers than PayPal’s previous Direct Payments API offering. Now, PayPal has struck back with its own flexible API and is trying to engage the developer community to freely build applications off of its platform.

PI, so it should be interesting to see where developers go.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

It looks like PayPal is rolling out a more flexible payments API called Adaptive Payments. We’ve obtained a confidential document, which is embedded below, explaining the details of the new system.  Basically the API is designed to give developers full access to PayPal’s features, allowing them a lot more freedom in building applications which include the ability to accept and distribute payments.

Very similar to Amazon’s Flexible Payments Service (FPS), the Adaptive Payments API handles payments between a sender of a payment and one or more receivers of the payment.   Adaptive Payments allows almost the same functionality as FPS. The new API lets developers become a payment aggregator, which we are told is something against PayPal’s current Terms of Service. Amazon’s FPS also lets developers aggregate payments. Moreover, Paypal’s Adaptive Payments has built in micropayments support, another feature of FPS.

Some of the offerings of Adaptive Payments are sure to be attractive to developers. In what PayPal calls “Chained Payments,” developers can create applications that enable a sender to send a single payment to a primary receiver who may keep part of the payment and pay other, secondary receivers with the remainder of the funds. For example, an application might be an online travel agency that handles bookings for airfare, hotel reservations, and car rentals. The sender sees only the travel site as the primary receiver. But that site could allocate the payment for its commission and the actual cost of services provided by other merchants. PayPal would deduct the money from the sender’s account and deposit it in both the primary travel site’s account and the secondary receivers’ accounts.

Adaptive Payments will also offer “Parallel Payments,” which would let a sender send a single payment to multiple receivers. An example of this type of application might be a shopping cart that lets a buyer pay for items from several merchants with one payment. The shopping cart would allocate the payment to the merchants who actually provided the items. PayPal would then deduct money from the sender’s account and deposits it in the receivers’ accounts.

It’s unclear what PayPal’s pricing plan will be for Adaptive Payments and if it will be competitive with Amazon’s FPS pricing. Amazon has slowly been rolling out its competition to PayPal over the past few years, launching Amazon Payments and unveiling the beta of FPS. It isn’t easy for Amazon to replace PayPal, but it is going after developers to become the preferred payment mechanism on the Web. Perhaps PayPal is starting to feel the heat from FPS, which allows much more flexibility than PayPal’s Direct Payments API. Now, with its Adaptive Payments API in the works, PayPal is about to strike back.

Adaptive Payments –

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Starting today, that list includes other tools like online payment handling platform PayPal, basic photo editor Picnik, Xoopit service MyPhotos and file sharing application Zumo Drive. If you already have access to the applications Yahoo brought to Yahoo Mail back in December, you’ll notice several of the apps the next time you log in, located along the left side of your inbox.

Thanks to the integration, Yahoo mail users get access to a number of useful services without the need to leave the communication interface. That way, Yahoo intends to increase the stickiness of one of its core products, in a relative, open-minded way. After all, users now don’t need to leave the interface to e.g. crop photos, transfer money, share large attachments with others, and so on, and Yahoo is not restricting itself to using or building proprietary tools.

Gmail, your turn.

In related news, Yahoo is also adding a good number of OpenSocial applications to MyYahoo today.

More on today’s Yahoo Mail announcements in this quirky video:

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Editor’s note: The guest post below was written by Brian Lawe, CEO and Founder of MyStoreCredit. Brian’s company develops e-commerce tools around payments, cross-promotion and customer mapping. He’s been watching Twitter for some time.

The rumors are ripe that Apple, Microsoft, Google and News Corp are all sniffing around Twitter – but no one has mentioned the best fit: Amazon. If Amazon doesn’t jump into the arena, someone at Twitter ought to make a call to Jeff Bezos. Neither Amazon nor Twitter should miss the powerful synergies from merging the two companies. To wit:

1. Introducing Twitter Payments: Amazon has been struggling to gain traction with its payments platform. They will never unseat or even threaten PayPal until they come up with a unique and differentiated strategy. The world does not need yet another payment option. But Twitter is something new and does offer a smart strategy. By rewarding Twitter users for associating their Twitter accounts with their Amazon account, Amazon can instantly create a new, potentially dominating powerhouse in payments for mobile and online transactions.
2. Using Twitter as the base, builds on PayPal’s model of making payments easy by letting users pay just by entering their Twitter ID – which would be the same as their Amazon Payments ID. If Amazon Payments can seize this deal and execute a launch of “Twitter Payments,” the net result could make Amazon/Twitter Payments a real threat to PayPal and a real payments choice for users.
3. One of the least-understood benefits of tightly tying PayPal to eBay transactions is the resulting free promotion PayPal gets being front-and-center in all eBay transactions. Visa or Mastercard would have to pay millions and millions to get that kind of preferred-positioning in a transaction. By linking Amazon Payments to Twitter accounts – Amazon could get the same preferred position for ALL mobile payments – all at no cost. Smart money puts PayPal’s current valuation at $8-12 billion. Not a bad return if Amazon bought Twitter for $700 million.
4. PS: While Google has a payments platform – it is structurally different from Amazon Payments and it would not benefit from the same synergies with Twitter. Google’s payment service is more like a credit card consolidation service vs. a true payments platform.
5. Amazon’s recommendation engine is suited for 140 characters: Twitter has an albatross: No obvious business model has emerged for Twitter and none seems evident to justify a $100 million (let alone $700 million) valuation. Google has taught the world that over-paying for a hot media property (Youtube) solely based on “users” is a dumb move. Hulu took some time in coming on, but it proves the case that any hot new media isn’t immune to competition forever. Which means Twitter will have to offer a sustainable business model to pay-back its buyer. Which brings us to Amazon’s unique ability to capitalize on Twitter’s highly restricted media medium.
6. What could any advertiser possibly do with a service that constrains itself to only 140 characters? Unless you are a copy-writer, you can’t comprehend how difficult it is to promote something in just 140 characters!
7. Enter Amazon’s recommendation engine. Tweet “Amazon’s recommendations 4 u:” and you still have 111 characters to describe a book, movie, song, toy or any other item sold on Amazon. The 140 characters alone are highly constraining. In this case, the medium is most definitely not the message. The message has to be the message. And the message has to be extremely targeted.
8. You can’t target a 140 character message unless you know a whole hell of a lot about the recipient. Amazon alone is the best player to use its database of shopping history to create highly targeted 140 character messages to Twitter users. Imagine if Amazon offered a $5.00 coupon to any Amazon buyer who registers their Twitter account on Amazon? Once the two are linked—game over.
9. My thinking assumes ultimately someone will have to pay the piper for the “free” twitter service and twitter-approved ads make the best sense.  If that is ultimately true and an ad-driven model emerges, then the restriction of the 140 characters is a huge constraint which can only be overcome with highly-effective cross-merchandising (which only Amazon does effectively at scale).
10. Among the current named suitors, only Apple is also similarly situated to utilize the character limitation to highly cross-promote. But what can it cross-promote? Songs? An average song is only $0.99. Compare this low price item to Amazon’s ability to promote any product at any time. Amazon can use the same 140 characters to promote $5, $50 or $500 items. Think of it this way: If Apple was equally successful at cross-promoting a $0.99 song as Amazon might be at cross-promoting a child’s toy for $50 – the profit value Amazon would capture in the same promotion and for the same tweet would be 10-50x better than what Apple could capture.
11. Amazon could best control the brand marketing experience: Twitter users are not going to sit by passively letting a new owner test formats forever. If they feel spammed, they’ll turn and run from Twitter. There is risk that any new owner could destroy the Twitter brand by over-testing or probing for a promotion model to make a Twitter acquisition pay off. But Amazon has a core-strength in doing this. Amazon is renowned for its ability to test creative and GUI’s and measuring sales results. Top that off with Amazon’s “one-click” to buy patent — and you just made mobile buying as easy and comfortable as apple pie.
12. Amazon needs to take some risks.  Amazon’s recent results relative to its arch-rival eBay are impressive. One lesson Amazon can take from eBay’s missteps is the need to invest in new ideas before your existing model begins to gentrify. Clearly, mobile and social are two huge areas where Amazon should be looking to play. Twitter gets them into both games. Amazon does run the risk, as eBay did with Skype, of choosing the wrong horse to ride. But given the threat of losing Twitter to other players who will then control promotion and marketing access to mobile users, this is one bet Amazon ought to take today.

Twitter needs a revenue model. Like democracy, the one I propose is the worst—except for all others. I wish the Twitter folks all the best in their decisions in the days ahead. But if Amazon doesn’t step-up to the plate now—and with a very big bat—they will have missed one hell of an opportunity.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

While advertising revenues have been disappointingly low for most applications on Facebook and other social networks, another option app developers are increasingly turning towards is micropayments for virtual goods or premium features. Both Facebook and MySpace have admitted that they are working on their own payment systems, and Apple could play a role as well since it already has a payment system in place for iPhone apps (although even Apple is running into some bumps).

While the bigger players are fiddling with their payment system plans, nimbler startups are moving in to fill the gap. One of these is Spare Change Payments, which is trying to become the Paypal of micropayments. A year after launch, more than 700 apps across Facebook, MySpace, and Bebo use Spare Change for micropayments. Spare Change is processing $2.5 million a month in micropayments, which is a $30 million annual run-rate. The apps that are having the most success with micropayments are games and ones that sell virtual goods.

Over a million people have already signed up for Spare Change. Hundreds of thousands of those use it actively on a monthly basis. And it is not all nickels and dimes. Last year, 250 people spent more than $1,000 apiece on digital goods through Spare Change.

Now, the company is making it easier for consumers to pay through Spare Change with a new payment widget that pops up in each app instead of sending people off to a separate payments page. You can choose between several payment methods including a credit card, Paypal, Spare Change credits, or through your mobile phone bill. Once you buy a minimum of $2 worth of Spare Change credits, you can use them as currency for apps that charge as little as $0.10 at a time. It is also introducing a PIN ID for users who choose to tie their accounts to a credit card so that they can use the same PIN across any app that uses Spare Change. The experience is designed to be familiar to anyone who has ever downloaded an app from the iTunes store. You enter your PIN, and then go back to the app. The company accepts payments from 190 different countries.

The first app to launch with the new widget is Mind Games on Facebook. It requires developers to add only three lines of code. Spare Change will roll it out to MySpace and Bebo soon. Spare Change is designed specifically for social networks. Customer support is done via the direct messaging systems inside each network, and the company analyzes the social graph to sniff out fraud. For instance, it looks at how many friends someone has and other factors to assign risk scores to individual consumers. Spare Change has been bootsrapped with only about $500,000 in seed funding, and two of the co-founders (Mark Rose and Simon Ru) previously worked at Paypal.

For micropyaments, Spare Change is much cheaper than Paypal, which offers its own micropayment option. Paypal charges 5 percent plus $0.05 for transactions less than $12, but only for premium accounts that qualify (otherwise, for most small accounts, it is the normal rate of 2.9 percent plus $0.30) . In contrast, Spare Change takes a processing fee of 8 percent for each transaction. CEO Lex Bayer points out that while Paypal has a micropayments offering, it does not seem to be a huge priority. “PayPal is not well designed for micropayments or digital goods,” he says. The logic driving Paypal is to encourage larger transactions because that is where Paypal makes more money.

A bigger concern for him should be if Facebook, MySpace, or Apple ever decide to jump into the micropayments game. Meanwhile, he has an opportunity to stake out a piece of the micropayments market and fight it out with the other startups eying the same prize. For instance, Zuora recently launched subscription billing for Facebook apps, Zong and Mobilecash are trying to tap into mobile payments (although the fees are still too high). Whoever figures it out first will be collecting more than just nickels and dimes.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Apparently at least some Australians aren’t happy with a PayPal advertisements that include legendary Aborigine David Unaipon with a motorcycle police helmet added on to suggest PayPal has heightened security. The ads, which are on the sides of buses in Australia, says the Sydney Morning Herald, are disrespectful and degrading according to Unaipon’s relatives.

The ads also apparently feature other bills as well. And PayPal, instead of just not commenting or removing those specific ads, makes a mess of it. “PayPal spokeswoman Kelly Stevens said the ads were “perfectly legal”" – which doesn’t really address the issue.

Best quote from the article: “It is very disrespectful because for a start no Aboriginal people have a helmet – we’re not bikies and we’re not Vikings.”

It’s not clear that many other Aborigines are offended. And the two Unaipon relatives seem to be in the process of shaking down the government for permission to use Unaipon’s portrait on Australian currency at all. Maybe they’re just looking for a little something from PayPal, too.

Sometimes I feel bad for PayPal and all the negative publicity they get. Then I remember how terrible their customer service is, and how many times I’ve been angry at them, and I feel a lot less bad.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Although eBay beat its downwardly-revised earnings numbers today, its earnings call was filled with glum news for investors. (Full earnings slides embedded below). After three flat quarters, revenues declined 3.6 percent from the second quarter to $2.2 billion. Free cash flow has been going down each of the last four quarters, and so has the total value of goods traded over the auction and e-commerce site. eBay is leaning much more heavily these days on merchant-dominated categories like autos than on auctions between ordinary people.

Even PayPal’s revenues were flat in the quarter at $597 million. Maybe the $945 million acquisition of Bill Me Later will help reignite growth. Its classifieds business (Kijiji) brought in a respectable $250 million in revenues.

Another eBay business that is holding its own, surprisingly, is Skype. Revenues for the third quarter were $143 million. Although its growth rate is slowing, at least it is still growing, both on an annual (46 percent) and sequential quarterly (5 percent) basis. Its total registered users grew 51 percent to 370 million, and those people used up 16 billion minutes of talk time.

The annual growth rate of those minutes ((63 percent) is actually accelerating compared to the preceding quarters. And, most important of all, the number of minutes people actually pay for (2.2 billion Skype Out minutes) is also experiencing accelerating growth (54 percent).

Unfortunately, at only ten percent of eBay’s total revenues, Skype is still too small to counteract its overall decline. Maybe they can still sell it.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

For both services, Amazon charges a transaction fee that starts at 2.9 percent of the order amount, plus 30 cents per order (it goes down to 1.9 percent for sites doing more than $100,000 a month in sales). And for transactions less than $10, Amazon charges 5 percent plus 5 cents.

Amazon already offers an array of payment services for both consumers and businesses, including a Flexible Payments Web service for developers to build their own checkout experiences for themselves. Hints of these latest additions came out in June. Checkout and Simple Pay are aimed squarely at businesses who may not have the resources or time to build their own payment service using Amazon’s Flexible Payment Services API. Amazon is going after PayPal and Google Checkout by leveraging its own payment software (and the millions of existing accounts tied to its system) and making it available to others.

Amazon is making big strides towards building cloud computing services, from payments to storage to compute cycles. If it can succeed in creating meaningful revenues from these services, they should be higher-margin businesses than shipping books and CDs. (In a related move today, Amazon is simplifying its Mechanical Turk Web service so that non-coders (i.e., business managers) can set up tasks they want to automatically farm out to digital workers across the world.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

The new offering allows Payoneer card holders that live outside the US to receive direct Automated Clearing House (ACH) deposits/payments without the necessity of actually having a US bank account.

Here’s how it works: Payoneer maintains a bulk of sub-accounts under its main account, which is held in an American bank. When an ACH transfer is initiated, each of these sub-accounts is referenced using its own routing and account numbers. When the funds are credited to one of these sub-accounts, Payoneer loads the funds to the associated card.

Contrary to their name, these accounts are not virtual at all. Payoneer’s thinking here is to call them virtual accounts because they only serve as channels for loading money onto their cards. The accounts cannot be used for wire transfers, they don’t bear interest, etc. I may be splitting hairs, but the name could be a bit snazzier.

The Payoneer Virtual US Account might not seem all that exciting to some, but I assure you, this is a huge deal if you are an international payee. Take the following scenario as a case-in-point:

Let’s say you’re an affiliate marketer living in Russia and you’ve just had your monthly commission deposited to your PayPal account. With Payoneer, it works like this now: you can perform an ACH transfer directly from your PayPal account to your Payoneer Virtual US Account. The funds will be immediately available on your Payoneer Debit MasterCard balance, ready for cash withdrawal from an ATM in Moscow, or available for charge at any MasterCard point-of-sale station (department stores, supermarkets, etc.).

Payoneer’s Virtual US Account program is still in pilot mode and only available to a select group of cardholders, for whom Payoneer can accurately verify the source and destination of funds.

While the program is clearly valuable to international payees, things are a bit stickier with the PayPals, LinkShares and iStockPhotos of the world whose “blessing” is necessary for the program to take off. The crux of their concern is a fear of issues related to money laundering compliance. They would prefer to avoid the matter completely rather than risk getting themselves into hot water. Their “blessing” is necessary because they may already (or can easily in the future) update their terms and conditions to stipulate that ACH transfer to payees from certain countries are barred.

The fact that Payoneer’s systems and methodologies are designed to deal head-on with international compliance issues should help it on this front. If Payoneer has been given the green-light to broaden its offering to include Virtual US Accounts, it has probably handled compliance issues to the satisfaction of its bank, which must have kept a particularly close eye on it from day one.

Many, if not most, Internet startups focus on the American market and its users. Often times this leaves international users without the access to products and services that US users find common-place. So it’s good to see a company like Payoneer simplify payments and cash outs for international payees. It might not be easy, but the rewards could be substantial.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Barrons is all breathless about Amazon getting ready to step up its game in the payments arena. Eric Savits writes:

Cantor Fitzgerald analyst Derek Brown asserts in a research note this afternoon that Amazon “may soon launch a PayPal-esque Payments service for use by consumers and merchants across the Web, potentially siphoning growth and/or profit from eBay’s crown jewel.” Brown says that Amazon could launch such a service as soon as late summer or early fall of this year.

But wait. Amazon already competes with eBay’s PayPal. It’s called Amazon Payments and it lets you:

—send money to anyone’s email address or mobile phone.
—make online purchases at other participating Websites
—buy Amazon products using your mobile phone.

It launched the current version of Amazon Payments last year. Also, last year Amazon launched its Flexible Payment Service as a Web service in limited beta so that developers could integrate Amazon’s checkout into their own sites (customers use their Amazon login, and the Website gets paid by Amazon, after a fee).

The article notes that both of these services exist, but does not explain how Amazon could go beyond their current offerings. So it is not exactly clear what further steps Amazon will take to beef up its current Amazon Payments service into a full-fledged competitor to PayPal. In terms of functionality, it is already pretty close. It even looks the same as PayPal. (Click on screen shot above).

Even if it does push the service harder, Amazon won’t find it easy to displace PayPal, which is deeply entrenched as one of the preferred payment mechanisms on the Web. But competition does keep everyone honest. So good luck to Amazon.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Developers who are building apps that use PayPal to handle payments usually require the application to send a request to the PayPal service. The URL’s used in these requests are all on the paypal.com domain name, and there is a test environment setup on a URL at www.sandbox.paypal.com. In Google App Engine apps, requests to either of these URL’s returns a generic ‘download’ error with no specific details.

A number of developers complained in a Google App Engine forum discussing the issue (also on Hacker News), where they also found a way to bypass the restriction by using a third-party proxy (like TinyURL). Then, early this morning, a Google employee named Marzia Niccolai wrote a comment, saying that the error was caused by their anti-phishing protections:

Thanks for the report! This is a bug, and we have located the problem. There was an error in our anti-phishing protections that was blocking some specific URL domains from being fetched using the URLFetch service. This was an oversight on our part, and these specific domain restrictions will be removed in the next few days.

Normally something like this wouldn’t raise too many eyebrows. But there’s too much bad blood between Google and eBay not to question this, and Google’s anti-phishing blacklist does not, of course, list the paypal.com domain as a phishing site.

Most developers who have commented on this so far strongly believe that this was a deliberate block by Google. So far, we can only take Google at their word that blocking Paypal was an accident because of the way their anti-phishing rules work. But with so many phishing sites involving Paypal, you would think that when implementing their rules they would at least check that the real Paypal site still works. Besides, the Google.com phishing test shows that Paypal is considered a safe site.

Why would it be different for App Engine? To make things more suspicious, that phishing test tool was launched last month.

We have emailed Google for a comment and will be updating this post as news comes in.

Update: In the post we mentioned that some developers were using a third-party server and/or domain to proxy requests to PayPal. It turns out that even those proxy requests no longer work (they did at some point), leaving one of the developers on that thread to conclude ‘I guess they are blocking PayPal at their (Google’s) gateway..’.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Ebay Australia currently allows merchants to accept credit cards, direct debit, money orders and checks for purchases, but from June 17 they want to allow only PayPal or cash on delivery. When the Australian Competition & Consumer Commission (ACCC) asked for public comments on the proposal a lot of of people responded. But an anonymous 38 page document that is highly critical of Ebay’s move was submitted on May 26, leading to speculation on who the author might be.

It turns out, the title of the document, hidden in the PDF metadata, gave a very good clue “Microsoft Word – 204481916_1_ACCC Submission by Google re eBay Public _2_.DOC.” An Australian named David Bromage first discovered it.

The document is still available on the ACCC’s website (and is embedded below), with the title stripped out. But the Australian newspapers are all over this now.

Google’s competing product to eBay, Google Checkout, is only available to merchants in the US and UK, so they don’t directly compete yet with PayPal in the Australian market. Apparently, that hasn’t stopped them from trying to keep their options there open.

In the document, Google says Ebay’s actions are anti-competitive, that the public benefits claimed by Ebay are “illusory” and that the proposal will result in significant public detriment. They also request that the ACCC ban Ebay from the action under the Australian Trade Practices Act.

Will eBay retaliate? Last year they temporarily pulled all Ebay advertising on Google after they announced a Google Checkout party at an Ebay event. If they get that mad over a party, I can’t imagine how they’ll respond to this 38 page treatise on the evils of PayPal.

The full document is below. And in other news, PayPal was finally able to fix that drop down menu bug that plagued users for over ten days and was ignored until the press and blogs started to pay attention.

Google Objection To Ebay AustraliaPayPal Proposal – Find Documents

Crunch Network: CrunchBase the free database of technology companies, people, and investors

Sometime around May 16 a bug appeared in PayPal’s subscription payments page that stops people from paying if they live in a different country than the site collecting the money. The original complaint and discussion about it are here. More discussion here.

We’ve been hearing about it for a few days now, but bugs generally aren’t big news and we don’t cover them except in unusual circumstances.

Here’s what makes this different – it’s been going on for nearly ten days now, and the bug appears to be nothing more than a small issue with a drop down menu (see video above). A couple of days ago PayPal took the time to note the bug, but still no fix. People are starting to get really angry about it.

It appears that they simply aren’t storing the value of the country when a user changes it, a very simple thing to change, perhaps a single line of code. In fact, it probably took them longer to write the blog post noting the bug than it would have taken to simply fix it. The most likely explanation for the ridiculous amount of time it has taken to fix it: it’s probably stuck in a bug queue, and has to wait its turn. Meanwhile, PayPal merchants are losing money.

One merchant comment sort of says it all:

It’s staggering that PayPal has not fixed this most basic payment issue immediately. I contacted support when I received the first customer complaint about five days ago and PayPal support already knew about the error but could not provide an estimated time to fix it. Clearly PayPal cannot be relied upon to provide a stable payments system.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Israel and Palo Alto based Fraud Sciences offers automated anti-fraud systems including SpotLight VFX and SpotLight T2T, merchant solutions the provide transaction verification with fraud prevention. In an October 2007 profile, Israelplug said that Fraud Sciences products “help online retailers verify the identity of buyers and accept orders that they would have seen as suspicious in the past – thus enabling them to increase their sales.”

eBay said the acquisition will assist them in significantly improving trust and safety across its sites in 2008. Fraud Sciences’ risk tools will be integrated with PayPal’s fraud management system.

Personnel from Fraud Sciences, including Yossi Barak, Fraud Sciences’ COO, and founders Shvat Shaked and Saar Wilf, will join PayPal’s technology and fraud management teams.

This acquisition is expected to be completed within 30 days.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

The Granny Warriors had fund raised the $55,600 required to be lodged with the New Hampshire Secretary of State yesterday but had their account suspended by Paypal at the last minute. The inability to access the funds resulted in a missed deadline and no GOP recount in New Hampshire.

Ron Paul support groups are urging Paul followers to contact Paypal directly to protest the decision.

We don’t have word from Paypal as to why they suspended the account, but what ever the reason we know they’ll regret it as their mail servers are inundated by a group of people who pursue their support of Paul with unprecedented zealotry.

See Ron Paul’s stance of tech issues at TechCrunch Tech President Primaries here, and our July 2007 write-up of the Ron Paul online campaign here.

(via Ron Paul War Room)

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Sending and receiving funds on Money Exchange is free (as it is on PayPal for funds between two PayPal members). Dave Cautin, the senior vice president in charge of Revolution Money’s online business explains, “It is an opportunity to very easily collect money from your friends and associates. It could be used by housemates sharing the rent, or friends chipping in to buy a group gift.” Of course, there are many other apps that do this on Facebook already, including ChipIn, CashFly, and PayFriends, which are all based on PayPal. OboPay, which lets you text money to your friends from a mobile phone, also has a Facebook app. None of these are particularly popular, however. PayPal has 65 active daily users on Facebook. ChipIn has 81. CashFly and OboPay each have 3.

Revolution Money sees an opening here. “Massive online communities will have a currency,” predicts Cautin. And he wants Revolution money to be it. “For us, social networking is our laser focus,” he says. The company is also working on integrating the payment service into AIM, and offers it through its own Website.

In truth, Revolution Money sees MoneyExchange as a loss leader for its real business, which is the RevolutionCard, its credit card that undercuts Visa and Mastercard. It has no intention of making money off of MoneyExchange by charging for transactions because in its eyes the online payment service is just a way to build up a valuable network of potential credit card customers. You can be sure that every MoneyExchange member will get an offer for the RevolutionCard. Steve Case is just seeding the market.

Crunch Network: CrunchBase the free database of technology companies, people, and investors

This is a common tactic for Google, which has tried to to buy market share in other struggling areas as well, like its radio ads. With Google Checkout, the company is also leveraging the popularity of AdWords. After the free period is over, for every $1 that a merchant spends on AdWords, he will get $10 worth of Google Checkout sales processed for free. Google is using its dominance in search and search advertising to subsidize and break into other markets. That becomes easier to do as Google’s search market share keeps rising (comScore has it at 58.5 percent for October, Hitwise says 65 percent for November). Someone call the antitrust lawyers.

Below is an an e-mail sent to Google Checkout members yesterday:

From: “Google Checkout Team”
Date: December 11, 2007 12:47:57 PM PS

Subject: Update on Google Checkout transaction processing fees

Hello,

We’re writing to let you know that Google Checkout’s free transaction
processing offer has been extended to February 1, 2008. At that time,
Google Checkout will be transitioning back to its standard fee
structure.

You will still be able to earn free transaction processing if you use
Google AdWords – for every $1 you spend on AdWords, you will be able
to process $10 of sales through Checkout for free. For additional
sales, you’ll be charged a low 2.0% plus $0.20 per transaction. Fees
are the same for all payment types (Visa, MasterCard, American
Express, and Discover) and there are no monthly, setup, or gateway
fees. To learn more about Google Checkout fees, visit
http://checkout.google.com/seller/fees.html

If you’re an AdWords advertiser, make sure you link your AdWords
account with Checkout to earn free transaction processing. When you
link by February, 2008, your AdWords spend from January will count
towards free processing in February.

For instructions on how to link your account, go to
http://checkout.google.com/support/sell/bin/answer.py?answer=80154&topic=13456
If you’ve already done so, you might want to check that you’ve linked
to the correct AdWords account. Just log in to your Checkout account
at http://checkout.google.com/sell/ click on the ‘Settings’ tab and
click on the ‘AdWords’ link at the left of the screen. Note that your
Checkout and AdWords accounts must be based on the same currency in
order to be linked.

If you’re not yet a Google AdWords advertiser, you can learn more or
open an account at http://www.google.com/ads/adwords_checkout/ Google
AdWords can help grow your business by connecting you with customers
just as they are searching online for what you sell. With AdWords,
you’re always in control of your budget and you’ll pay only when
people click on your ads.

Please visit our Help Center at
http://checkout.google.com/support/sell/?hlrm if you have any questions.

Thank you for using Google Checkout!

The Google Checkout Team

Google Inc.
1600 Amphitheatre Parkway
Mountain View, CA 94043

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

The Storefront widget offers a seamless e-commerce platform for those wishing to sell anything on their site, such as t-shirts, CD’s or other items

The widget (see pic right) includes:

• An Index page that shows thumbnail images of all the items for sale through the widget
• a product page that shows a larger view of the items/ products for sale
• A shopping cart directly within the widget
• About and policy pages mean that any conditions are also contained with the widget

Users can set the widget to “sold out” or “sorry we’re closed” from the central control panel, and comes standard with a sharing option; visitors are able to grab the html for the widget from the widget and display it on their own site should they so desire.

I spoke with Paypal prior to the launch and they emphasized that the product was focused on blogs and social networking sites. Paypal has a deal with SixApart that sees the widget being embeddable into TypePad blogs without the need to copy and paste, for everyone else though its no more difficult than any widget is to embed, presuming you know where to get at, and where to paste the html.

Initially there are some limitations with the service, for example you only get the choice of one size for the widget, and it currently only supports sales in US dollars. Paypal though will be seeking user feedback once the program takes off and they are open to expanding the options available in the future.

Paypal sees a lot of possibilities for the widget; for example it provides a seamless shopfront for bands on MySpace who may want to sell recordings. It may also be a substitute for donation buttons that are occasionally used by bloggers as well; Paypal admits that some of their previous embeddable shopping options haven’t been as user friendly as they’d hoped, where as the Storefront widget is focused on being simple to use for everyone.

I’ve had time to play with the setup features for the widget and there’s little doubt that Paypal got the easy part right. Drop down menu items for navigation compliment sample products to get users started.

There are some parallels to Tailgate, in that both are transaction on the page. The difference with the Paypal widget is that like any Paypal transaction payment is made on the Paypal website itself to guarantee a secure transaction; the widget is fully transactional only to the last purchase point. This is functionality usually delivered by often expensive merchant solutions where as Paypal is offering this service for free, except of course they get a standard cut from the sale itself.

I know when I first heard about Paypal’s Storefront Widget that my thoughts were: here we go, yet another widget offering, but this is impressive and quite unique in the marketplace. I’d think that this product will be warmly received by those with something to sell, or those who haven’t offered items for sale previously on their blogs or social networking pages due to the cost and technical knowledge required in doing so.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.