Amazon launches competitor to PayPal
Amazon.com has launched new online payment options which are clearly stiff competition to the current dominant payment platform on the Web – PayPal. One one hand you see the practical nature of having its own payment system, but on the other there’s a certain amount of reservation about going for a player that does a job as reliably as PayPal does.
Amazon’s Checkout by Amazon and Simple Pay are targeted at small businesses, reported the WSJ. Like PayPal’s one-click system, Checkout allows users to click on a button to pay as well as provides tools to manage other little charges like shipping and sales tax. Simple Pay is the real dealbreaker here – it’s a set of payment-only products that will allow consumers to carry over their wallets to other sites, directly taking on PayPal.
The popular online shopping site is certainly taking a risk by attempting to take on PayPal which has a presence in 190 markets, operating locally in 13 countries and managing over 164 million accounts. Privacy issues also crop up – can you really trust Amazon with your credit card number and shipping address? Mark Stabingas, vice president of Amazon Payments certainly thinks so. “Customers will be coming through an experience that is really similar to Amazon’s,” he said. “People will like the familiarity and the comfort associated with that.”
How will eBay, PayPal’s owner react to the incursion? Likely, they won’t allow Amazon’s Simple Pay used on eBay but though eBay might block it, other sites won’t have the incentive to do so. Google attempted to get in on PayPal’s business with its own Google Checkout but has yet to really get much headway in the market.
The buzz on the New York Times is that other retailers will give Amazon’s payment method a wide berth. It would be like Target trying to push its own payment system to Wal-Mart – too much potential for abuse in the name of competition. Even Borders and Toys “R” Us have refrained from selling their wares on Amazon.com, accusing the online retail giant of undermining their sales on the site as well as using their sale data to outsell them.
Two years ago, Google also introduced a payment system, called Google Checkout, but it has not widely caught on with Web sellers.
One advantage PayPal has over Amazon is that many large retailers see Amazon as a competitor. Companies like Toys “R” Us and Borders, the book chain, have retreated from selling products on Amazon.com, complaining that the company was undermining their sales on the site and using their sales data to compete more effectively with them. Will Amazon succeed where Google fail? Time, and numbers, will tell.
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