Amazon goes down the subscription-based payments river

In news that probably isn’t news to anyone who follows the world of payments, Amazon just announced it is entering the world of payments. And not just any payments, but specifically subscription-based payments.

Amazon Payments, which has been around for a number of years, has now extended its so-called “Login and Pay” feature very specifically at managing payments involving subscription-based services such as a monthly phone bill, or an ongoing music or video service.

As we’ve seen, subscription-based billing is a hot area created from the popularity of services such as Netflix, Spotify and others, and Amazon is hoping to become the trusted payments broker for people who don’t want to give their credit card details to unknown merchants or deal with multiple accounts. Amazon also promises safe and quick checkout, with financial details not actually leaving Amazon’s care, and with purchases covered under the same buyer’s protection policy offered on Amazon’s own site.

The move makes perfect sense for Amazon, which has on hand details on millions of credit cards. It also doesn’t hurt that Amazon will charge almost 3 percent per transaction (plus 30 cents for transactions of $10 or more), making for a nice new revenue stream.

This news comes just in advance of a rumored smartphone announcement from the online retail giant, which may be a sign of a mobile payments strategy yet to come. At the very least, Amazon may force users to pay their monthly phone bills using their payment system.

PayPal and Google Wallet (formerly Google Checkout), which dominate the online payments world with their ubiquitous payment buttons on a wide range of sites, will probably be the most impacted by Amazon’s announcement. While both companies are also highly regarded and trusted by consumers, Amazon’s more than 240 million customers may decide to stick to a known service for future purchases.

Regardless of which payment system someone uses, the overall benefit comes down to security especially when it comes to newer merchants or service providers that haven’t yet built up the cachet of larger competitors.

Amazon’s challenge now will be to get as many merchants as possible to support it. So far, the company has conducted trials with a handful of vendors like mobile phone company Ting – which claims Amazon payment users spend 30 percent more on the Ting site – and PeachDish, which delivers ingredients and instructions each week to help customers cook gourmet meals at home. In fact, Amazon is the only form of payment accepted at PeachDish’s site.

The big question is if Amazon will be able to be the dominant payment button of choice for online transactions. The company’s not-so-stellar history of dealing with sellers, which includes vendors selling products for less than Amazon and Amazon moving into areas that directly compete with its own sellers, might make merchants wary of handing over their customers’ information to complete transactions.

But customers who are tired of entering credit card details for each and every online purchase or transaction shouldn’t mind having another choice in their virtual wallets, and maybe the added competition will bring more innovation and options for online payments down the road.

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About Anita Karve 37 Articles
Anita is a writer and editor with 20 years of experience covering just about everything in the technology space with a focus on computer networking and telecommunications. She was managing editor of Billing & OSS World magazine and technology editor at Network magazine and most recently was in charge of newsletter coverage at TM Forum.

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