Amazon is stepping up in the battle for your digital wallet. In this post to the FinTech podcast, John Dunne shares his thoughts on what this means to the consumer, the market and other players.
Scott: Amazon is committing to the payments arena. Here to break down the impact of that is John Dunne with IR. John, how will such a big player affect the marketplace?
John: So, Amazon Payments is a great example of just how dynamic the payments market can be. You know, they're traditionally a bookseller and their one click buying capabilities. And then one day they realize not only have they got a great competency around offering online stores, but they have a great competency around offering payments. And they launch Amazon Payments as a way for anyone to have their payments bought through Amazon. So run your own online store. It doesn't have to be Amazon but the payment will still go through them and they'll still make a little bit of money out of that purchase.
Scott: How does this differ from PayPal?
John: So what's interesting here is many people in the US and the UK and Europe have their Amazon accounts. And they have all their capabilities set up inside it with their credit card details, their shipping addresses, their billing addresses, et cetera. And what Amazon have done is captured that in a really simplistic fashion so that any online store can simply embed a few simple controls provided by Amazon and suddenly Amazon will take care of processing that payment on behalf of that online store. It's a great way to leverage their core competency and it's a great way for consumers to have trust in who they're spending money with online.
Scott: Will this cut into other established companies like PayPal? For example, I bought just last night from a major US retailer that a lot of people would know. My wife wanted some blinds. And at the end of the checkout, pay with PayPal. We just clicked it. Yes, boom, on the way. So that's kind of what you're describing with Amazon, right?
John: Yeah, and I think some of the differences is from a merchant perspective, Amazon have made it very very simple to embed just at a HTML level how to take a payment. They have a very simplistic fee schedule. That is, it's got a couple of tiers but very predictable so people know what to expect. And you know, there's no additional cost to the consumer to do that. So you don't have to—there's no additional transaction fees to the consumer when dealing with including multi-currency transactions.
Scott: So what does the future hold for Amazon Payments really as they get started here?
John: Interestingly, Amazon are really going after the online payments space. And what they're saying is you know, their number one priority is if you want to buy something, buy it through Amazon. But number two, if you can't find what you want on Amazon, then pay for it through Amazon. And what this strategy brings is as I mentioned, that trust. And you know, I had a friend who set up a small online store just a few months ago and they were looking at ways to build payment, take payments for what they're selling. And, if you look at, you know, creating a new entity that has no brand equity, no awareness of, people have no awareness of it but they come across it, they say, oh yes, this is what I'd like. I'd like to spend a hundred dollars on this. Do I want to type my credit card details into a form that looks like, you know, this could be a website hosted in any country in the world. I don't know where my credit card details are going? Or do I trust Amazon and I'm not actually going to give this online store my credit card details. I'm going to do a payment through Amazon and say you take this for me? And so I think their future here is really around helping other organizations leverage the Amazon brand equity and Amazon trust to make that payment.
Scott: For more analysis of the ever-changing payments environment, visit the thought leaders at IR.com.