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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