PayPal, a subsidiary of eBay, has launched the second PayPal X Developer Challenge to encourage the development of commerce-enabled applications using its platform.

PayPal is rewarding the most innovative applications that leverage the PayPal X open global payments platform. After the success of the first Developer Challenge, the company is expanding the contest with new sponsors and more prizes: in addition to the $100,000 grand prize for the most innovative idea, PayPal is also offering $10,000 PayPal X category Awards.

“The response to our first Developer Challenge was great and we wanted to provide the opportunity to our developer community again,” said Naveed Anwar, senior director of the developer network at PayPal, San Jose, CA.

“We expanded our challenge and added key partners and X Awards to empower developers to think outside the payments box and address critical needs and wants of their consumers,” he said.

Last month, PayPal launched its Mobile Payments Library for the Android operating system, giving developers a way to integrate payments into the applications they build (see story).

Mobile payments app awards
The X Awards, issued by PayPal and its partners, will be awarded to developers who create an application or service that directly impacts its users’ daily lives in a certain category.

These include:

• Best application that leverages PayPal X’s Mobile Payments Library (available on iPhone and Android)

• Best application built by university students

• Best consumer application

• Best application that promotes cross-border commerce

• Best application that takes advantage of Yahoo’s platform

• Best application that takes advantage of eBay’s platform

In addition, PayPal is also introducing two community-based awards: the People’s Choice and the 2010 Innovate Awards.

The People’s Choice winners will be selected by the PayPal X online community and the top finalists will be invited to exhibit at PayPal X Innovate 2010.

The 2010 Innovate Award winner will be selected by attendees of the PayPal X Innovate 2010.

PayPal is trying to encourage application developers to use its APIs for payments by rewarding the best ideas.

A complete list of PayPal X APIs is also on https://www.x.com.

Developers that register for the Challenge by Aug. 4 at 11:59 p.m. PDT will be entered to win one of 10 iPads.

The winners will be announced at PayPal X Innovate 2010 on Oct. 26-27 at Moscone West in San Francisco. 

The first Developer Challenge launched at the PayPal X Innovate event in November 2009 and attracted hundreds of submissions, including the winners, Rentalic, a person-to-person rental marketplace, and appbackr, the first wholesale digital marketplace for iPhone applications. 

The grand prize winner of the current PayPal X Developer Challenge will receive an award totaling up to $100,000, including $50,000 into the winner’s PayPal account and $50,000 in waived transaction fees.

Finalists and the grand prize winner will be determined by a panel of judges that includes Roelof Botha of Sequoia Capital, Dave McClure of 500 Hats and Dana Stalder of Matrix Partners.   

“This Developer Challenge is bigger and better than last year,” said Mr. Anwar said. “We brought in important partners and expanded the prize pool.

“We’ve reduced the friction to integrating payments in apps and look forward to seeing the creative use cases and awesome integrations we know they’ll develop,” he said.