Amazon to take on PayPal with new online payment service
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Amazon.com has launched a competitor to Paypal, allowing consumers to pay for goods they use online with the credit card information Amazon has on file for them.
The service, which launches today, allows the company's more than 240 million active users to use credit card details stored on Amazon.com to pay for services such as a monthly phone bill or a digital music subscription.
Amazon then charges a fee on each transaction, boasting 'your shipping and payment information is safely stored with Amazon and accessible on thousands of sites where you love to shop.'
The Amazon Payments service, which launches today, allows the company's more than 240 million active users to use credit card details stored on Amazon.com to pay for services
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Amazon Payments allows the company's more than 240 million active users to use credit card details stored on Amazon.com to pay for services such as a monthly phone bill or a digital music subscription.
The service can also be used to transfer money between personal users.
'When you log in and pay with Amazon, you can use the information stored in your Amazon account to login and pay conveniently on thousands of sites other than Amazon.com,' the firm says.
There's no recurring fee for retailers to use the platform, though Amazon plans to take a standard cut of 2.9% from those businesses, plus $0.30 for each transaction of $10 or more.
EBay Inc's PayPal has long dominated online payments services but Amazon sees plenty of scope to push into new areas.
The new service broadens Amazon's profitable role as a middleman for third-party sellers, which account for 40 percent of its sales and extends its influence beyond its website.
It also comes ahead of June 18 unveiling by Chief Executive Jeff Bezos of what is widely expected to be a smartphone key to expanding Amazon's role in mobile payments.
'You should see it as one of many things that we'll do to expand where people might think about Amazon helping them,' Amazon vice president of seller services Tom Taylor said in an interview.
Amazon has been testing the new service over the last several months with start-ups including Ting, a mobile phone company that is part of Tucows Inc.
Those who used recurring payments by Amazon spent 30 percent more on Ting's website, product manager Justen Burdette said in an interview arranged by Amazon.
Some analysts have said Amazon has been held back in payments because merchants are wary of handing over customer data to the company, which has a record of rapidly expanding into new areas and competing with sellers.
The payments system is the latest in a the latest in a series of moves that Amazon founder Jeff Bezos (pictured) has made into PayPal's territory
But Taylor said the only details collected by Amazon as part of the new service is the dollar amount of each transaction and not any 'item-level information.'
He added that the service would encourage Amazon users who might otherwise be leery of handing over their credit card details to a fledgling companies to try out them out.
'If you think about giving a merchant that you may not know very well the right to continue to charge your credit card in the future, you really want to know that a good relationship with Amazon stands behind that,' Taylor said.
'We hope whoever the next Spotify out there is thinking about Amazon,' he added, referring to the privately held, popular digital music subscription service.
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