PayPal used its inaugural PayPal X Innovate 2009 conference in San Francisco to officially announce the PayPal X program to release APIs allowing developers to integrate PayPal seamlessly into third party applications. The expanded functionality will help PayPal to compete against similar online payment services from Amazon and Google.
The new PayPal APIs allow developers to engage customers directly within their own applications rather than forcing them to port users off to the actual PayPal site. Users who don't even use PayPal can actually sign up for PayPal within the third party application and begin making PayPal payments seamlessly from within the interface.
PayPal wants to make it easier for developers to leverage its payment system, ostensibly making PayPal a sort of de facto currency for the web. Part of the goal of opening PayPal to developers is also to expand the types of transactions PayPal is used for to include things like paying rent, or employee payroll.
PayPal also has its eye on smart phones and wants to incorporate PayPal payments into mobile applications. Google Checkout is already working on mobile devices, and Nokia is working on its own mobile payment system, Nokia Money.
PayPal is an established name in online transactions. It built a reputation for providing a safe and secure means of making payments for things like EBay purchases. It worked so well and got so popular that EBay eventually bought PayPal in 2002.
PayPal doesn't provide the service as a charity though. There are fees involved and some users have taken issue with those fees (including recently adding fees without notice for services that were previously free).
Rather than adopt PayPal (and the fees that come with it) for online payment, Amazon and Google have developed homegrown online payment systems. Google and Amazon are both online gorillas, and Amazon is a huge online retail site, so the competition is a threat to PayPal.