Amazon Seeks a Piece of Every Online-Payment Pie

Much the way PayPal is working to extend its reach into the bricks-and-mortar world, so Amazon.com is looking farther afield across the rest of the Web. The online purveyor this week launched Login and Pay with Amazon, a new program that allows online businesses to set up login and payment credentials through Amazon to ease the registration and payment process.

For participating sites, payment choices will include an Amazon option. Customers will then be able to choose to login and pay with the credentials that Amazon has on file, including credit card data.

“Amazon has more than 215 million active customer accounts,” said Tom Taylor, vice president of Amazon Payments. “Login and Pay with Amazon enables companies to make millions of our customers their customers by inviting online shoppers with Amazon credentials to access their account information safely and securely with a single login.”

Fraud Protection

Websites can implement Login and Pay with Amazon using a set of widgets and APIs to embed on the site and integrate with back-end systems. Login and Pay uses the OAuth 2.0 protocol.

With the checkout process set up, businesses can then manage and track orders; view purchase history details; offer special discounts; and provide access to shipping addresses and payment methods in the Amazon database.

Fees for Login and Pay are comparable to those of similar services offered by PayPal and other providers. Specifically, participating businesses pay a standard transactional rate of 2.9 percent plus US$0.30 per-transaction on purchases of $10 or more. Amazon provides fraud protection on all transactions as part of its fees.

Payment Players

Commerce sites selling goods available on Amazon are not the targets of Login and Pay, though they will be free to use the service. Their transactions are already covered by Checkout by Amazon.

An early user of Login and Pay with Amazon is Gogo, which provides WiFi for airlines such as American Airlines, Delta, United and Virgin America.

“Login and Pay with Amazon is best for companies who require their customers to create an account but also have some sort of transaction,” Amazon spokesperson Julie Law told the E-Commerce Times.

‘Amazon Does Have the Power’

With this new offering, Amazon is going up against PayPal and other payment service companies.

“I think Amazon does have the power to challenge PayPal,” Greg Sterling, principal analyst at Sterling Market Intelligence, told the E-Commerce Times.

Amazon might even charge lower rates than its competitor for processing payments for other businesses, Sterling suggested.

“The larger context is that Amazon is trying to be an enterprise provider of services,” he explained. “This may be part of that larger strategic plan.”

Facebook also got in the payments game this week when it joined with players such as Microsoft, Bank of America, Discover, Living Social and MasterCard to create the CardLinx Association. With that initiative, Facebook is hoping to get more people to share more details, including their credit card information.

“We’re looking at Facebook and Amazon having a head-to-head competition here,” BIA/Kelsey senior analyst Peter Krasilovsky told the E-Commerce Times.

‘A Very Credible Threat’

PayPal may have particular reason to worry given the size of the customer base for which Amazon has payment credentials.

“It is a threat to PayPal by virtue of the fact that almost a quarter of a billion people already have Amazon accounts and use Amazon frequently enough to remember their login credentials,” Doug Stephens, author of The Retail Revival, told the E-Commerce Times.

“This puts them in a position to become the default payment method,” Stephens added. “Combine this with Amazon’s aggressive stance on unnecessary consumer and merchant fees and you’ve got a very credible threat — not just to PayPal, but to everyone in the payment category.”

Amazon’s brand, meanwhile, is stronger than PayPal’s, Sterling said.

‘A Total Win-Win’

Perhaps most important from the user’s perspective is that an Amazon login option means there’s no need to register with a site in order to make a purchase.

“One of the most significant pain points for online retailers — especially small ones — is cart abandonment at the time of payment,” said Stephens. “Registration forms are onerous, lengthy and prompt worries on the part of customers about over-sharing their personal and payment information.”

Login and Pay with Amazon could alleviate such concerns and also “speed up the entire check-out process,” Stephens said. “It’s a total win-win.”