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By Leena Rao

Yesterday MasterCard (NYSE:MA) announced a definitive plan to open up its credit cards payments platform to developers to build innovative online and mobile apps. Of course, this has been the territory that PayPal has basked in, thanks to a much hyped launch of its API, PayPal X. PayPal senior director of PayPal X, Damon Hougland was quick to defend its place in the arena, saying that since its API was released last Fall, “thousands of developers have signed up, hundreds of apps have been built, and millions of dollars have transacted over our platform.”

While this is at the forefront of innovation for MasterCard, PayPal says that the developers who are building off of its platform are ahead of the curve. The company cites Bump, a technology to swap information between smartphones by tapping them together, which is used in PayPal’s iPhone app, allowing people to “bump” iPhones to transfer money (the app was downloaded more than one million times in the first three weeks it was out).

PayPal, which cites Facebook, Salesforce and IBM as users of its API and technology, says that next month it will offer developers the ability to collect credit card payments from within their PayPal X based application.

So is MasterCard a real threat to PayPal? Of course, MasterCard has not been known as the most developer friendly in the past, whereas PayPal has spent the past year reaching out to the developer community, even holding a conference completely for developers. But it also may come down to the revenue share numbers. PayPal said last year that it charges developers a $0.50 cents flat free per transaction or 0.75 percent of transaction depending on user cases. MasterCard hasn’t yet released numbers on revenue share (the platform won’t be released until later this year).

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Source: PayPal Goes on the Defense After MasterCard Opens Its Platform