Amazon Offers Seamless E-Commerce Payments Solution for Merchants
On October 8th, Amazon announced its new e-commerce payment method, Login and Pay with Amazon. The solution, long having been an integral portion of the amazon.com shopping experience, allows customers to log-in to a secure amazon account, select a payment method, and execute the transaction within a few clicks from any enabled merchant website. The service provides the expected features of an e-commerce checkout solution for merchants, but also offers more data-driven functionality including:
- Tracking repeat customer information
- Access to detailed transaction history, for both customer and merchant
- Instant access to shipping address and secure payment credentials
- Mobile-commerce ready functionality
- Fraud and risk mitigation tools
None of these individual features are ground breaking, but Login and Pay with Amazon stands out in its reach, providing participating merchants with instant access to the payment credentials of over 215 million Amazon accounts. Most online merchants have historically required customers to create an account, a time consuming process, or transact “as a guest” where the merchant misses out on associated customer data.
The Login and Pay with Amazon solution may not appeal to large merchants given many view Amazon as a primary competitor. Instead, we expect this solution to appeal to the long tail of the e-commerce market where customers are less likely to take the time to create an account and log-in for reasons such as inconvenience or security concerns. Moreover, merchants on the long-tail seek advanced, turnkey payments solutions and the possibility of leveraging the Amazon network will be appealing. The initial Pay with Amazon pricing schedule is tiered, but is also geared to smaller merchants.
With this solution, we expect Amazon to primarily target internet service businesses and small to medium-sized e-commerce merchants, including existing clients. Amazon’s pilot merchant for Login and Pay with Amazon, the on-the-go internet provider Gogo, cited better-than-anticipated results. Because Amazon is a front-end sales channel for tens of thousands of merchants via amazon.com, we expect these services to be familiar to many existing customers. The Top 500 internet retailers generated 77% of 2012 total U.S. e-commerce volume and estimates indicate that there are between 200,000 and 300,000 e-commerce websites in the U.S.
The Amazon solution will be an alternative on some levels to PayPal, a long-standing third-party e-commerce giant, which has 130 million accounts worldwide and provides a turnkey checkout solution for merchants. The PayPal account, we should note, allows for customers to draw from an existing balance or bank account in addition to the traditional network-branded payment products which Amazon leverages. PayPal customers may also qualify for BillMeLater, a credit account which can be used to pay for goods or services in the PayPal checkout process. PayPal, with a widely recognized brand in the payments space, is making a significant push into the brick-and-mortar retail channel while investing in a wide array of mobile payment solutions.
For Amazon, the move into third-party e-commerce payments represents a natural transition given its core e-commerce business; the technology powering the new solution and the associated customer experience has long been viewed as best-in-class on its proprietary site. While competitive concerns may limit adoption at the top of the market, the scale and reach of Amazon give it some rather unique advantages for existing and emerging e-commerce businesses.
For more information, please contact Aaron Mercurio, Senior Consultant, specializing in Credit Card Issuing, firstname.lastname@example.org.
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