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August 03, 2007

Amazon Payments Launched

Amazon has pulled the curtains on its Flexible Payment Service (FPS) and launched it in limited beta. And it's a beauty. FPS is not so much a consumer payment solution with heavy marketing but more a payment platform that can be used by developers to build payment solutions in the spirit of Amazon's S3 storage product (eCommerce enabler). Here's what it offers : 1. Send and receive money using credit card, bank account or Amazon Payments balance transfer as payment methods. 2. Create "Payment Instructions" to define conditions and constraints desired for a given transaction, and programmatically obtain payment authorizations or "tokens" that represent these Payment Instructions from customers. 3. Execute one-time, multiple, or recurring payments on behalf of customers. Aggregate micro-transactions into a single larger transaction using Prepaid and Postpaid capabilities. 4. Build payment applications where you are neither the sender nor the recipient of funds. You can build marketplace applications that enable the movement of money between two third parties. 5. View account balances, transaction histories, and transaction details on the Amazon Payments web site. FPS has to be integrated into a shopping cart (I would expect most vendors in this space to jump at Amazon Payments) to be available to buyers as a payment option and as such it does not compete directly against Google Checkout or PayPal Express Checkout (here's a good article from yesterday's Washington Post comparing the two). However, FPS does compete squarely against the traditional in-checkout PayPal payment method in two ways: * Embedded as a payment option in the checkout the buyer may now see traditional credit card options (Visa, MasterCard, etc.), PayPal Standard and Amazon Payments. Amazon is one of the strongest online brands with immediate trust and millions of registered users that have probably successfully bought something on Amazon without worry. Huge asset. * Amazon Payments supports stored value accounts for consumers although there is no information available on the interest rate paid (and PayPal offers a great money market rate). It's in beta so there are a few rough edges (I couldn't figure out the resolution process, something that PayPal has almost perfected over years of disputes on eBay and beyond). Are online retailers going to bite? While the rates are competitive (some of them eerily close to PayPal's , including seller tiers), both Google Checkout and PayPal offer free transaction processing through 2007 (and because they're locked in a battle of titans we can expect to see more of this in 2008). And I am not sure that's a battle Amazon is eager to enter just yet. As a payment platform, however, Amazon has taken a leadership role with FPS. We are likely to see new business models emerge and niche payment problems solved — in particular micro-payments (as a comparison PayPal's Micropayments feature requires two accounts to allow for different rates and is more expensive for bank account-funded transactions). Freshbooks, a provider of web-based accounting services, has a good blog post on their Fresh Thinking site on their use of Amazon Flexible Payments and the benefits. With millions of users and billions of successful transactions the question now is if eBay will include Amazon FPS in its Accepted Payments Policy . Share This