Amazon muscles in on PayPal’s territory

31 Jul 2008

Apart from PayPal, the Amazon checkout is probably one of the earliest online payment systems you remember using way back when in the mid to late Nineties. That whole shopping basket and ‘1 Click’ ordering sure is handy and Amazon seems to think so too – in fact it has decided to bring this payment system to other websites.

Now online merchants will have the ability to use Amazon’s Checkout – an all-in-one payment system that will act much like the one on the site. The service will include ‘1 Click’ and the ‘Express Lane Checkout’ but it will also process all the back-end calculations such as VAT and shipping costs.

“Customers will be coming through an experience that is really similar to Amazon’s,” Mark Stabingas, vice-president of Amazon Payments told the New York Times. “People will like the familiarity and the comfort associated with that.”

Amazon said there are no start-up charges, monthly charges, hidden fees, or long-term contracts for online merchants when using Checkout by Amazon. Instead, fees are calculated on a per-transaction basis.

So essentially what a customer will see after choosing their purchases is the option to ‘Checkout with Amazon’, meaning they can securely pay through Amazon Payments.

This approach to taking on PayPal is a two-pronged attack, not only will sites begin to use Amazon as their payment system but customers can also avail of Amazon Simple Pay – this means that someone’s account can effectively be used as a payment method on a third-party website so customers can bypass the merchants payment system, instead signing in using an Amazon ID.

One of the clever things about this is that Amazon is not just spreading its brand – it also gives merchants the option to flog some of Amazon’s own products to customers at the checkout stage and in return give them loyalty points.

One of the added benefits of having Amazon Payments as a middle man is that, much the same as PayPal, the originating site never sees the customers credit card details so there is less chance of exposure to credit card fraud.

However, from the merchant’s point of view, it has a drawback in that if a customer has a payment dispute with you, Amazon will receive notification first and send you an email asking you to respond within five business days.

For now, this new service is only available in the US.

By Marie Boran

Pictured: Soon online merchants will be able to use Amazon’s patented 1 Click payment system