Amazon Takes Payments Mobile, But Will Merchants Follow?

Amazon.com Inc. added more territory to its steadily expanding payments empire on Monday when it unveiled a mobile version of its payments service for third-party software developers, merchants, and distributors of mobile applications. Dubbed Amazon Mobile Payments Service, the system includes Amazon's so-called “1 Click” checkout service, which enables users to pay with a single click on their mobile devices after their first purchase. The mobile system already has one user, Kansas City, Mo.-based Handmark Inc., a creator of applications and services for mobile devices that began using it over the weekend. A spokesperson tells Digital Transactions News that the Amazon Payments platform with its 1-click feature will enable Handmark to match the ease of use offered by Apple Inc.'s huge iTunes music and software sales site. “On a mobile experience, that's what has been so successful for Apple,” she says. Seattle-based Amazon, the leading online retailer, in February launched a commercial version of its payments system called Flexible Payments Service (FPS) that enables merchants to build their own payments services using Amazon's technology (Digital Transactions News, Feb. 5). That system enables credit card, automated clearing house, and proprietary Amazon payments. It also has micropayments capabilities and so-called Quick Start programming that allows developers to more quickly integrate the payments program into their Web sites. All those features could be in demand by online retailers seeking to extend their sales channels to increasingly popular smart phones such as Apple's iPhone or Research in Motion Ltd.'s Blackberry. Amazon Mobile Payments taps the payment and shipping information online shoppers already have on file with Amazon.com. “Amazon customers can now also make purchases on third-party sites without needing to set up separate payment accounts?they simply use the payment information in their existing Amazon accounts,” Howard Gefen, director of Amazon Mobile Payments, said in a statement. Amazon did not respond to a Digital Transactions News request for further comment. Sparing mobile-device users from having to log in for each purchase gives Amazon's mobile service “some compelling features,” says consultant Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC and a former executive with ViVOtech Inc. and First Data Corp. “This is another sign that mobile payments' time has come.” Merchants' adoption of Amazon's mobile platform, however, still could be hindered by their conclusions about whether Amazon is a friend or foe in Internet retailing, according to Ablowitz. Amazon has morphed from a bookseller in the Web's early commercial days into a $20 billion online bazaar. “I wonder how retailers will feel about sharing this stage with Amazon,” he says. Target Corp., which has used Amazon since 2001 to sell online, said in August that it would leave Amazon and migrate to its own e-commerce platform by late 2011. Rivalry has not been a problem for Handmark, however. The spokesperson says her 10-year-old company was one of the first online storefronts of games and other applications. Handmark accepts the major credit cards as well as eBay Inc.'s PayPal service and Google Inc.'s Google Checkout. But Handmark has other ventures with Amazon under way, details of which the spokesperson wouldn't disclose. “We're working with them on a variety of fronts for different mobile stuff,” she says. Amazon's release did not discuss the pricing merchant users will pay, but the FPS Web site's current pricing schedule is unchanged from February. Amazon Payments transfers cost 1.5% of the sale plus 1 cent. ACH debits are 2% plus 5 cents, and the fee for payments backed by credit cards is 2.9% plus 30 cents. For transactions under $10, the credit card fee rises to 5% plus a nickel, and for Amazon Payments balance transfers of less than 5 cents, the fee is 20% of the transaction, with a minimum fee of a quarter of a cent. Amazon offers three tiers of credit card discounts based on monthly payment volume: 2.5% plus 30 cents per transaction for volumes of $3,000 to $10,000; 2.2% plus 30 cents for volumes of $10,000 to $100,000, and 1.9% plus 30 cents for volumes over $100,000.