Digital Transactions Authoritative, insightful and timely information for payments professionals
Responding to a report that surfaced on Wednesday, online retailing giant Amazon.com Inc. refuses to comment on whether it is planning to introduce soon an e-commerce payment service that will compete with other alternatives to credit and debit cards. “We do not comment on rumors or speculation,” an Amazon spokesperson said in an e-mail message following an inquiry from Digital Transactions News. Amazon's alleged plans to launch an online payment service were the focus of an entry posted by technology blogger Michael Arrington on his blog, called TechCrunch. Relying on an unnamed source or sources, Arrington, a high-tech entrepreneur and former Silicon Valley attorney, says in the post that the Internet merchant has been testing the payment product “for a few weeks” and will launch it by the end of next week. The service, he says, will represent an “extension” of Amazon Payments, which allows sellers who use Amazon's marketplace or auction services to receive payment from buyers via Amazon, which makes regular transfers to their checking accounts. Amazon takes payment from buyers through major credit cards and then transfers the sums to sellers' accounts every two weeks, charging 25 cents plus 5% to auction sellers on each sale transaction. Marketplace sellers, who use Amazon's site to sell used items, do not pay an explicit fee for taking Amazon Payments, since the transaction cost is included in the commission Amazon collects when an item sells. This commission ranges from 6% to 15% plus 99 cents, with what Amazon calls a “variable closing fee.” The new payment service would join a growing list of so-called alternative payment products headed by heavyweights like PayPal Inc. and Google Checkout. But Amazon might have an advantage over lesser-known entrants, given its brand recognition and its experience in handling payments. “Amazon would be on the short list of folks who could extend what they're doing [in payments] pretty easily,” says Bill Tait, chief executive of Mercantec Inc., a Naperville, Ill..-based vendor of shopping-cart software that worked closely with Google Inc. before the launch of Google Checkout a year ago. Reserving judgment until more details emerge, Tait says the challenge Amazon would confront is the same PayPal, Google, and others have had to contend with: finding a balanced way to appeal to both buyers and sellers. “To take hold, you need a clear value proposition for both,” he notes.
