Payments Blog • 3 MIN READ

Amazon Payments: The Now Big Thing

John Dunne

Written by John Dunne

Amazon Payments is a great example of how dynamic the payments market can be. Amazon began its life as an online bookstore with one-click buying capabilities. They quickly expanded upon their selection of products and eventually decided to make their infrastructure available to others. One key offering they've created over the years is a fully featured payment platform. The platform is a convenient way for anyone with an online store to use Amazon as the processor. In return for providing the infrastructure, Amazon sees a portion of all merchant revenue.

PayPal is probably the first company that comes to mind as an established competitor in the payments arena. The key differentiator for Amazon is the huge base of customers who already have an Amazon account. Customers have their shipping and billing information saved and ready for single-click checkout. Amazon is implicitly trusted by millions of people in the US, UK, and Europe as a reliable and secure way to make purchases.

Amazon has built a platform that's compelling to both the customer and the merchant. From the merchant's perspective, only a few lines of HTML need to be embedded into a website to begin accepting payments. Of course, merchants can use the service without having to let Amazon host the storefront itself. The fee schedule is also very straightforward and simple to understand. There are no additional transaction fees for the consumer, even when dealing with multi-currency transactions.

It can't be understated how online merchants stand to benefit from leveraging Amazon's trustworthiness. A friend of mine set up an online store a few months ago. They were looking at ways to accept payments from customers. If you were to visit a website with absolutely no brand equity, you'd probably be wary of entering in your credit card details and other personal information. The website could be hosted anywhere in the world. Would you really know where your details are being stored? Are they being stored in an encrypted and secure manner?

On the other hand, even if my friend's online store had no brand equity, you would probably have a bit more confidence if you knew that your transaction was being processed securely through Amazon. They have a track record for reliability and it's likely that they are taking measures to retain your information in a secure form.

Amazon has clearly demonstrated their intent to aggressively pursue the online payments space. Of course, their number one priority is to sell products directly at Amazon. If they don't offer the product you want, however, at least you can pay for it though Amazon. The future is really focused around helping other organizations to take advantage of the features inherent in the platform. Amazon gets to leverage their core competency, merchants can leverage Amazon's brand equity and trust for transaction processing, and customers can benefit from a seamless user experience.

Topics: Payments

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