Regarding Amazon's 'New' PayPal Killer

Barrons is all breathless about Amazon (AMZN) getting ready to step up its game in the payments arena. Eric Savitz writes:

Cantor Fitzgerald analyst Derek Brown asserts in a research note this afternoon that Amazon “may soon launch a PayPal-esque Payments service for use by consumers and merchants across the Web, potentially siphoning growth and/or profit from eBay’s crown jewel.” Brown says that Amazon could launch such a service as soon as late summer or early fall of this year.

But wait. Amazon already competes with eBay’s (EBAY) PayPal. It’s called Amazon Payments and it lets you:

—send money to anyone’s email address or mobile phone.
—make online purchases at other participating Websites
—buy Amazon products using your mobile phone.

It launched the current version of Amazon Payments last year. Also, last year Amazon launched its Flexible Payment Service as a Web service in limited beta so that developers could integrate Amazon’s checkout into their own sites (customers use their Amazon login, and the Website gets paid by Amazon, after a fee).

The article notes that both of these services exist, but does not explain how Amazon could go beyond their current offerings. So it is not exactly clear what further steps Amazon will take to beef up its current Amazon Payments service into a full-fledged competitor to PayPal. In terms of functionality, it is already pretty close. It even looks the same as PayPal. (Click on screen shot above).

Even if it does push the service harder, Amazon won’t find it easy to displace PayPal, which is deeply entrenched as one of the preferred payment mechanisms on the Web. But competition does keep everyone honest. So good luck to Amazon.

Original post

Comments

[scot]

better watch out...you say something neutral about ebay on this website and the power whiners will let you have it!

[R Sargule]

Both Amazon and Paypal are reputed in their own businesses. One could see the benefits of integrating payment model with online retailing. However, given Paypal's extensive experience in payment operations (both domestic and international), it would have sophisticated risk modeling based on years of collected customer data. Amazon would take long to be where Paypal is today. Given the minimal switching costs for customers in this business, Amazon could get there. But then, would Paypal keep quiet and do nothing till then?

[Angie]

eBay has already tried to impose Paypal as the only option for payments on the Australian site and, inspite of the ACCC ruling that this was against competition rules, eBay are determined to impose their will on the sellers.

There is a dire need for a payments system which can stand up to the bully boy tactics deployed by eBay, not only do Amazon stand a good chance of leeching market share from Paypal - trust me, sellers are crying out for alternatives to Paypal - but if Google Checkout continues its rollout across the planet then eBay/Paypal's share of everyone elses hard earned cash is going to reduce substantially.

Amazon is already a trusted and respected name in the ecommerce sector, good luck to them with whatever the new improved system is to be.

[bluesmoke]

I for one and appalled and sick of paying Paypal's ridiculous fees. It is a major rip-off.

[Et tu, Brute!]

As stated by Angie above, eBay, in Australia despite the ACCC pending ruling -- and they've clearly warned eBay it goes against their fair competition act -- against the dictate of sellers only using Paypal as payment, eBay evidently has STILL sent Australian sellers notice to comply in July to only accept Paypal as payment or their listings would be cancelled.

I can't see the Australian government rolling over. They don't. Interesting to see how this plays out.

Further, Amazon, securely anchored and well established, would indeed bring serious competition against eBay's Paypal as a payment source. Amazon is all about taking care of business. NOW through network media eBay/Paypal claims to be addressing anit-fraud issues that have been ongoing for a couple years and not seriously addressed. Could the long, dark shadow of a serious contender be responsible?

I left the Bay perminently a couple months back and went over to the River and have been much more satisfied in every respect. At this moment Amazon is eBay's one true competitor. Other sites are growing and WILL and ARE lending weight to wares that are trickier to place. And many sellers in truth will feel more comfortable elsewhere.

As a Paypal competitor though? Amazon would be great!