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PayPal Makes Moves to Woo Back Start-Ups

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.

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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.

In particular, PayPal needs to mend its reputation with start-ups if its momentum is going to continue — outdated APIs, lackluster developer support and a penchant for freezing member accounts at the slightest sign of trouble had started to damage the service's rep among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

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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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