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PayPal announced that it is opening an API to developers to allow them to embed PayPal’s payment system into their own apps and platforms. The company, a subsidiary of eBay, says this is the first global payment platform to open to third-party developers.

"Until now, developer innovation has been stifled by the barriers payment systems impose," says PayPal President Scott Thompson. "With an open platform, we’re solving fundamental challenges people face when trying to pay or get paid and giving people the tools to create new business models for their innovations."

A few developers have already had the opportunity to utilize PayPal’s API via a beta program. These include developers with TwitPay and Microsoft’s Windows Azure. Here is what they had to say about it.

"The Windows Azure platform provides developers with a scalable, interoperable cloud development environment to build and deploy services and applications," says Microsoft Distinguished Engineer Yousef Khalidi. "By allowing the developer community to take advantage of the PayPal adaptive payment platform through the Windows Azure platform, developers will have the opportunity to utilize a billing solution for the Windows Azure platform services they offer by providing customers with an easy on-line payment program option."

"Using PayPal’s new open platform, we’ve dramatically improved the experience of commerce over the social phenomenon, Twitter," says TwitPay CEO Michael Ivey. "The global nature and ubiquity of the PayPal service helps us deliver a great service for Twitter users."

The move is probably a good idea on PayPal’s part considering we don’t quite know yet what Facebook is going to unleash on the world (payment platform-wise). Competition is likely going to heat up. Giving developers the ability to incorporate PayPal into their own apps and platforms could go a long way as the web in general becomes more and more open. PayPal is already a well-established brand, and without doing something like this, it could risk losing a lot of customers unnecessarily.

PayPal does not specify when the API will become available. That will presumably be determined by the success of the beta program.

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