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PayPal Makes Moves to Woo Back Start-Ups

Friday, 8 Mar 2013 | 2:50 PM ET
Eric Piermont | AFP | Getty Images

It's transformation time for PayPal.

The eBay payments unit, which has been driving that company's growth, is announcing some changes today that it hopes will help fend off some scrappy competitors — and convince skeptical start-ups that it's no longer a pain to work with.

(Read More: How to Protect Your Small Business Against a Cyber Attack )

This is part of what PayPal president David Marcus has been trying to do since he took the reins at PayPal almost exactly a year ago. Although the brand has a Teflon reputation on Wall Street, Marcus seemed to know coming in that things could easily go off the rails.

PayPal Efforts to Fend Off Challengers
PayPal, part of the eBay payments unit, is announcing changes today intended to fend off challengers, reports CNBC's Jon Fortt. The company needs to mend its reputation with companies and users, he says.

In particular, PayPal needs to mend its reputation with start-ups if its momentum is going to continue — outdated APIs, lackluster developer support and a penchant for freezing member accounts at the slightest sign of trouble had started to damage the service's rep among power users.

(Read More: SXSW-Bound 'Buspreneurs' Found Start-Ups on the Way )

Three new initiatives start to address that:

First, PayPal is releasing tools that should make it easier to use within an app on your phone, either by tapping a PayPal button or scanning your credit card with the camera.

They're also testing new APIs that will basically make it quicker for developers to integrate PayPal's service into their apps.

Finally, they're trying to make a developer-friendly website where people can go to figure out how to work with PayPal.

(Read More: After Apple Snub, Can This Mobile Payment Method Take Off? )

The move is particularly important because start-ups have grown disaffected with PayPal, which has allowed competitors like Braintree and Stripe to get a foothold with some of the hot new apps and services. Airbnb, OpenTable, Rovio and Uber, for example, use Braintree for accepting credit card payments. Foursquare, LearnVest and Boxee use Stripe.

Still, this is just a first step for Marcus at PayPal. Late last year he took to the blogosphere to blunt criticism of PayPal, saying that under the cultural transformation he's pushing, they'll now admit when they suck at something and work to fix it.

Marcus promised better APIs, which he's begun to deliver here. But he'll need to deliver more this year to win back disaffected developers.

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.