cash-registerPayPal has been making a big deal about convincing developers to build cool applications using its global payments platform. Today it added a little more incentive, by announcing the PayPal X Developer challenge, where the creators of the most innovative payments apps will receive a total of $150,000 in cash and waived PayPal transaction fees.

Basically, the PayPal platform is supposed to give companies and developers more flexibility about how they process payments, by opening up a number of new APIs to developers. When the platform was first announced in July, PayPal executives said they wanted their technology to become the “electricity” that powers all online commerce. The initial APIs included the ability to send money, make chained payments, and parallel payments. New APIs announced yesterday include currency conversation, payments to non-PayPal users, and pre-approved payments.

Contest finalists will be chosen by popular vote at the PayPal developer website. Then a team of expert judges — eBay founder Pierre Omidyar, PayPal president Scott Thompson, Andreessen Horowitz’s Marc Andreessen, and Sequoia Capital’s Roelof Botha — will choose the winners. The creator of the top app will receive $50,000 in cash and up to $50,000 in waived PayPal fees.

More than 1,000 developers tried the platform during the beta testing period, PayPal says. To illustrate what can be done with the platform, the company put me in touch with one of the beta testers, MedPayOnline. The company offers an online service to help hospitals process payments, and says it has used the PayPal platform to streamline its service. For MedPayOnline, the most significant change may be the ability to collect its fees right away — it charges a transaction fee for each payment that it processes for hospitals, but it previously only got paid once a day, as a lump sum.

“It could cause a significant amount of heartache,” said chief executive Clayton Bain. “Granted, we’re not talking about months here, we’re talking about hours, but within those hours a lot of bad things can happen.”

Bain said the new APIs also make it easier for MedPayOnline to instantaneously make chained payments of its own. So when it’s paid by hospitals, the company’s partners (i.e., companies that package MedpayOnline with other services) get paid right away, too.

[image: flickr/Fen Branklin]