Amazon to rival PayPal as payment middleman

The online retailer Amazon is reportedly poised to begin rivaling PayPal by offering a payment 'middleman' service for websites to utilize. Customers who store card details with the company, as the vast majority do, will be able to use those cards through Amazon to pay for goods online through third-party sites. As with PayPal, Amazon will charge a small fee on each transaction.

According to Reuters, the service will go live on Monday and make it even easier for Amazon to act as a middleman between customers and the many successful third-party sellers on the site. These currently comprise 40% of all sales conducted through the company.

The new system will work alongside the existing 'Pay with Amazon' button for third party sites which redirects you to Amazon to authorize payments

Although it may be hard to significantly shift PayPal's monopoly on the market, Amazon appears to think that it is possible. Tom Taylor, vice president of Amazon seller services, told Reuters

"You should see it as one of many things that we'll do to expand where people might think about Amazon helping them."

He added that he hoped the ability to pay with Amazon would help some consumers to overcome fears they may have when giving their credit card details to a previously-unheard of company. Of course, this goal isn't exactly unheard of as the - although not invulnerable - security of PayPal is one of the features that has let it grow to its current state as respected and trusted by many consumers.

PayPal though is already developed and supported by thousands of stores worldwide in varying currencies and it is hard to imagine many of these users switching to Amazon as their payment provider. Amazon has been testing the feature over the past few months with a number of start-up businesses. One smaller mobile phone network, Ting, told Reuters that people spent 30% more on their website when paying in recurring intervals with Amazon as opposed to giving their details to the site directly.

Amazon's Taylor attempted to allay fears over information collected as part of the transaction process by reassuring that "no item-level information" is kept. Amazon apparently only know the monetary value of each transaction and nothing more.

The feature enables Amazon to grow larger in departments beyond online retail and its own site, where it has been hugely successful selling products at the cheapest possible price. It will be able to integrate even more fully with third-party merchants and at the same time grow stronger itself. The announcement comes just over a week before an Amazon press release where the company is expected to release its rumoured smartphone to join its other devices in the form of the Kindle tablet range.

Source: Reuters | Image via Amazon

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23 Comments

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Hoping the customer service is the same as you get on Amzaon which generally tends to be pretty good, compared with paypal where the support/cs is practically non existent.

ANY competition to PayPal is welcomed here. Their extortionate fees, lacking security and shady practices need some competition.

jamieakers said,
ANY competition to PayPal is welcomed here. Their extortionate fees, lacking security and shady practices need some competition.

Amen.

jamieakers said,
ANY competition to PayPal is welcomed here. Their extortionate fees, lacking security and shady practices need some competition.

Good lad! You beat me to the punch here. Paypal should burst in flames in the 7th circle of hell.

jamieakers said,
ANY competition to PayPal is welcomed here. Their extortionate fees, lacking security and shady practices need some competition.

Agreed. Hopefully Amazon gives them this competition. I'm still shocked that no one has taken them in on price...

I would use it as a donation path vs Paypal but Amazon doesn't have a FREE way to do that like Gifting much like Paypal does.

I presume seller fees are going to be exactly the same as PayPal's. If so, I don't call that competition.

The question for me - if this is to be a serious contender to PayPal - would be whether the new Amazon payments system allows you to receive payments in multiple currencies? - something which PayPal allows, but others like Google Checkout (which has since merged with Google Wallet) doesn't!

Putting PayPal on my cart doesn't promote a competitor like this would. Screw Amazon and their monopolistic practices.

JohnCz said,
Putting PayPal on my cart doesn't promote a competitor like this would. Screw Amazon and their monopolistic practices.

Isn't eBay technically a competitor for everything?.... you know, the owner of paypal

PayPay and Ebay, don't make/sell their own stuff .. Amazon digital media, readers & tablets, tv box, smartphone and others. Huge huge difference. If Amazon stuck with being a online retail mall and fulfillment services I would have much less of a problem with this. I don't consider their cloud services in conflict.

Credit cards only?

What about withdrawing from a checking account? What about cash held in the amazon account separate from the credit card or bank account?

So instead entering your CC info directly to each site, Amazon will autopay it on your credit card for an additional small fee.

Seems like a striped down version of paypal. No thanks.

Am I missing something here? How is this different from the Amazon Payments system that has existed for years?

As you said, I think this has existed for a while. This time I think Amazon will seriously throw their weight behind it, though.

The real advantage is that not everyone gets to see your credit card details. This is particularly pertinent with smaller retailers who often don't have particularly good security in place because their webstores have been built by a one-man-shop who is often someone who isn't aware of good security practices. The reduction of surface area for exposure for my credit card is no bad thing.