Watch Out PayPal, Amazon Gets Serious About Payments

Last August Amazon launched their Flexible Payment System that allowed startups to take money using Amazon’s back end. At the time it was hailed as a PayPal competitor, and on some levels, it was — it was a merchant account replacement that could be co-branded and allow developers to take payments from their web site. However, it was far from a simple payment product. When it launched, Amazon’s Jeff Barr warned that using FPS wasn’t for the faint of heart. “Designed specifically for developers, the ‘F’ in FPS shouldn’t be taken lightly,” he said. “This is a very rich service — the API document is over 250 pages long.”

Today, Amazon expanded their payments offerings with the launch of Simple Pay and Checkout. Both are available through Amazon’s Payments page and the new services are aimed at small businesses, but don’t require nearly as much developer knowledge.

Amazon published a comparison chart of their three business offerings. The main difference between FPS, Checkout and Simple Pay is that FPS requires “advanced programming skills using APIs” to get implemented, while the others require just HTML or scripting knowledge. There are further differences between Simple Pay and Checkout as well — Checkout is the more complete product in terms of how much of your ordering process Amazon takes care of, while Simple Pay handles payments only and offers more options for consumers in terms of how they can pay.

The fee structure for each is the same and is competitive with PayPal. For payments over $10, sellers will pay 2.9% + $0.30 with volume discounts starting at $3k in sales per month, and for payments under $10 the fee is %5 + $0.05 per transaction.

The New York Times notes that many sellers may be wary of using Amazon’s payment services because they view Amazon as a competitor and don’t want the Seattle-based retail giant access to their sales data. “Many larger retailers express concern about partnering with Amazon because Amazon is one of their largest competitors and they don’t want Amazon to know their information,” Scot Wingo, CEO of ChannelAdvisor, told the New York Times. “On the other hand, eBay and PayPal aren’t going to use sales data to go source product themselves because they are not a retailer.”

But given eBay’s recent shift toward fixed-price goods, such as their broad partnership with Buy.com earlier this year, sellers may become increasingly wary of them as well.

Tell us, would you trust Amazon over or as much as PayPal to handle payments for you? Where does Google Checkout fit into this equation? Let us know in the comments.

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  • Tijs

    As long as both Google and Amazon offer their payment products in the US only they are no serious competitors for Paypal i’m afraid. It’s too bad because Paypal could do with some competition.

  • andregoncalves

    Yes I agree, I think they are missing on a huge market outside the US.
    I would be a customer of amazon FPS if available in Europe.

  • nixwebo

    I think it will be hard to change the wave from paypal by there shear amount of users they already have. There massive user base makes it hard for any retailer to change payment options altogether, they would obviously loose sales. But amazon payment may be another option to offer.

  • http://triunedesigns.com leoschmidt08

    I would trust them as much as PayPal. However, I have used PayPal for such a long time and now have such a strong programming familiarity with them that I cannot imagine using (or recommending) anyone else at this point in time. Maybe I will in the future…

  • http://triunedesigns.com leoschmidt08

    Tijs said “It’s too bad because Paypal could do with some competition.”

    To a certain degree, though, I would consider credit card third-parties as competitors so it is not quite the monopoly I believe you are making it out to be. I have had clients wanting online credit card processing through their already-established processing companies. The costs were pretty high, so to me Paypal was a very natural choice amongst a lot of the competition.

  • jprice

    good luck amazon!

  • Cheryl

    I agree with jprice and tijs – paypal needs a revamp and competition. Good Luck Amazon or anyone
    else that can give paypal a run for their money.