PayPal Inc. has made several changes to its payments system aimed at making it easier for software developers to devise new ways to hook into its network.

"PayPal can power all of e-commerce," John Donahoe, the president and chief executive of eBay Inc., PayPal's parent, said during a presentation Tuesday at the PayPal X Innovate 2009 conference. "PayPal will become the leading online payments network."

A key part of its plan is the development platform it introduced at the developers' conference, which PayPal said should help it establish a strong foothold in growing areas such as mobile payments.

PayPal's developer platform has been compared by observers to Apple Inc.'s iPhone app store, for its potential to unleash a torrent of creativity by giving more outside developers the chance to come up with payments applications.

Scott Thompson, PayPal's president, said in a presentation that "the world is going from analog to digital at a pace that no one imagined possible … but payments have work to do. We need to turn your great ideas into great, enduring businesses."

Among the other changes PayPal announced this week is a new rate structure for services such as rent payments. When the new rates go into effect next year, people receiving such payments would pay 50 cents, or 75 basis points, depending on the situation.

Osama Bedier, PayPal's vice president of platform and emerging technology, said PayPal's regular rate structure "just doesn't work for rent, payroll, B-to-B payments or many other service sectors." PayPal needed to adjust its pricing to allow developers to "break into new businesses that have been dominated by paper money."

He conceded, however, that cash may still be tough to replace for some transactions; cash "will always be the payment choice for tooth fairies, drug dealers, senators paying their household staff," he said. "You know, off-the-books kind of stuff."

Some companies that had early access to PayPal development tools have already announced new payment functions. For example, customers of Green Dot Corp. can now use its store-bought MoneyPak cards to fund PayPal balances, and customers of the banking technology vendors S1 Corp. and Fidelity National Information Services Inc. will soon let their clients initiate PayPal payments directly from their bank accounts.

PayPal named its platform after the Internet bank that the company once ran. The bank was shut down in 2000 but PayPal kept its domain name.

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