PayPal Pivots From Platform To 'Operating System' - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Mobile // Mobile Business
06:02 PM
Connect Directly

PayPal Pivots From Platform To 'Operating System'

As it prepares for independence from eBay, PayPal is trying to redefine itself as something more than a payment company.

20 Great Ideas To Steal In 2015
20 Great Ideas To Steal In 2015
(Click image for larger view and slideshow.)

Later this year, PayPal will spin off as a public company separate from its mothership, eBay, which acquired the payment company in 2002. As it prepares for life without a corporate parent, PayPal faces growing competition from rival payment services.

Alibaba, Amazon, Apple, Facebook, Google, Square, and Stripe, alongside more than a thousand other startups, aspire to be the next PayPal. But the first PayPal plans to continuing growing beyond the $8 billion in revenue it generated in 2014.

The financial services industry is about to embark on a period of rapid change driven by technology -- the proliferation of mobile devices and the power of software to alter business models, said Dan Schulman, PayPal president and designated CEO upon independence, at a PayPal media event in San Francisco Thursday.

Citing Moore's Law and the mobile revolution, Schulman described the impact of technological change on the financial services industry as a "digital tornado."

"We're coming into the market at a time when the financial services industry is going through some really fundamental shifts," said Schulman, asserting that PayPal is "very well positioned to be a leading player in that transformation."

Incoming CEO Dan Schulman is broadening PayPal's plans

(Image: Thomas Claburn)

Incoming CEO Dan Schulman is broadening PayPal's plans

(Image: Thomas Claburn)

To reach that position, PayPal has spent the past few years modernizing its IT infrastructure. It used to take months to make changes to PayPal's platform, said Schulman. Now that PayPal has embraced service-oriented architecture and agile development, changes take hours, new feature releases come every two weeks, and each element of its platform has an associated API and software development kit (SDK).

PayPal is trying to reimagine itself as something more than a payment platform. PayPal now sees itself as a partner enabling other payment services. As one of slides at the company's presentation declared, PayPal's "Next Chapter" is as "the operating system for digital commerce."

[ Read how Elite 100 company PayPal revamped its data centers to deliver agility. ]

"We want to be more than just a button on a merchant's website," said Schulman. "We really want to provide a full suite of products and services and experiences off of our digital payments platform both to consumer and merchants."

PayPal has already gone beyond being a button on a website. It's a payment platform, a payment gateway, a payment processor, a digital wallet, a credit provider, and a source of financial data.

Thanks to its 2013 acquisition of BrainTree, a payment gateway that allows businesses to accept a variety of payment systems through the Web and apps, PayPal can still get paid if consumers prefer to pay using an app that implements Apple Pay through BrainTree's SDK, for example, instead of PayPal.

PayPal's acquisition earlier this year of Paydiant, a technology platform for retailers, also supports its broader ambition as an enabler for multiple payment mechanisms. "Operating system" may be overstating the case, but PayPal can credibly claim to be an ecosystem.

One announcement made at the event – the extension of PayPal's OneTouch for web and mobile to merchants using BigCommerce's online store technology – demonstrates how PayPal is looking beyond transaction fees. OneTouch allows shoppers at online stores built with BigCommerce technology to buy items with a single touch after their credentials have been entered once, via website or mobile device, all without the PayPal app. It's an effort to improve transactions in general rather than an effort to advance PayPal as a specific payment system.

"What we aspire to be is a true customer champion for consumers and for merchants," said Schulman.

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful ... View Full Bio

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
User Rank: Ninja
5/30/2015 | 3:03:01 PM
What happened to security?
Oh good, now in addition to the numerous phishing attempts being emailed to my PP account, consumers can look forward to even more financial institution hacking as well once PP embarks into the financial sector.
User Rank: Ninja
5/25/2015 | 9:39:14 PM
Operating System
"We really want to provide a full suite of products and services and experiences off of our digital payments platform both to consumer and merchants."

For someone who has using PayPal for many, many years. I'm just glad for them, and of course, for the consumers as well. And I agree, "Operating System" is stretching it a little bit.
User Rank: Ninja
5/25/2015 | 11:56:55 AM
Judging by their APIs...
Having done several dozen various API integrations, I have found that the condition of a company's APIs almost always mirrors the general internal state of that company. Twilio for example: Clean and easy to use APIs, well designed. Turns out that Twilio is quite easy to deal with, top notch service.

PayPal's API's and services are disasterous. They have many 'products' with very similar names, that I honestly can't tell the difference between. After weeks of wrestling with various versions of APIs, and much contact with their 'support', it turns out that we were using the wrong API the whole time, that is why it wasn't working properly. We were using the API they told us to use!

I don't see PayPal as being evil so much as incompetent, and they have been that way for well over a decade. They want to talk about innovation and adding features, that's insane. They stuff they have now doesn't even work right. Clean up your mess first PayPal, get your 'products' in somewhat resonable condition.
User Rank: Ninja
5/24/2015 | 1:02:06 PM
PayPal is a Freelancer's Best Friend
Nobody can tell me that "the check is in the mail", because PayPal is as close to instantaneous that it doesn't matter. I just hope that this doesn't change.
User Rank: Ninja
5/24/2015 | 12:47:28 AM
financial tipping point
PayPal and others will rule our world when the digital commerce (e-business and e-commerce) will surpass the brick-and-mortar commerce. When e-tailing exceeds in value than retailing.

That will be the time when it would make sense to get our incomes and keep our savings with services like PayPal & Stripe instead of JPMorgan. That financial tipping point is near. Not far.

The day is not far. Its near. Coming soon. Stay tuned.
User Rank: Ninja
5/22/2015 | 2:59:52 PM
Re: PayPal pursue frictionless transactions
I think it's great PayPal is seeing a new day where it is on its own apart from eBay. I still hold hope that the company is able to compete with Stripe as an easy payment mechanism on the internet. The fact that PayPal owns Venmo and potential to monetize it I think is really compelling. 
Charlie Babcock
Charlie Babcock,
User Rank: Author
5/22/2015 | 12:28:44 PM
PayPal pursue frictionless transactions
Yes, Tom, PayPal has a good shot at making it work as an independent company. It's concentrating on mobile transactions with less friction or zero friction to them, such as a consumer's smart phone's establishing its owner's credentials as it comes within range of a store's beacon, then a picture of the consumer flashed on a screen at the cash register for a visual-only confirmation of a purchase. No cash or cards changing hands.
Top 10 Data and Analytics Trends for 2021
Jessica Davis, Senior Editor, Enterprise Apps,  11/13/2020
Where Cloud Spending Might Grow in 2021 and Post-Pandemic
Joao-Pierre S. Ruth, Senior Writer,  11/19/2020
The Ever-Expanding List of C-Level Technology Positions
Cynthia Harvey, Freelance Journalist, InformationWeek,  11/10/2020
White Papers
Register for InformationWeek Newsletters
Current Issue
Why Chatbots Are So Popular Right Now
In this IT Trend Report, you will learn more about why chatbots are gaining traction within businesses, particularly while a pandemic is impacting the world.
Flash Poll