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Amazon.com Inc. quietly killed its PayPhrase online-authentication service on Feb. 20, not quite two-and-a-half years after introducing the system. The PayPhrase credentials system allowed online shoppers to check out using only a word or phrase of their choosing and a PIN that they had registered with the Amazon Payments service.
PayPhrase, however, apparently struck a chord with business users, and Seattle-based Amazon has introduced a successor service called “Purchase Delegation” that allows up to 300 authorized buyers to use the same account.
An Amazon spokesperson refused to discuss the shuttering of PayPhrase with Digital Transactions News. Amazon, however, has posted some information about it in question-and-answer format on its Web site. But Amazon’s answer to its own question, “Why was PayPhrase shut down?” does not actually state a reason. Instead, the reply simply says, “Since launching PayPhrase, we’ve learned a great deal about how our customers like to check out. We’ve applied many of these lessons to other features on Amazon.com.”
Amazon, whose Checkout by Amazon and Amazon Simple Pay services are used by many unaffiliated e-commerce merchants, promoted PayPhrase as a way to reduce so-called shopping cart abandonment, in which prospective online customers initiate but fail to complete a purchase.
Julie Conroy McNelley, research director at Boston-based Aite Group LLC, surmises that Amazon customers found that registering phrases for authentication wasn’t any better than the user-name-and-password protocol so familiar on the Internet. “It looks to me like they were trying to change consumer behavior without providing any compelling reason on why that behavior should be changed,” she says.
PayPhrase did allow users to delegate buying authority to others, such as one family member to another, but other payment forms do as well or better in that respect, McNelley says. “Parents have prepaid cards they can give their kids,” she notes.
Amazon’s Q&A tells PayPhrase users that they can use the “1-Click” button on checkout pages to automatically charge purchases to the default credit, debit, or Amazon Store Card associated with their Amazon accounts and have goods shipped to the address on file. Amazon also says that users who want to let someone else purchase at Amazon can send that person an Amazon.com Gift Card through e-mail.
While PayPhrase may not have been a hit with consumers, it seems to have found some enthusiastic users among businesses that took advantage of its multiuser feature and could apparently register up to 20 different phrases per account. On the home page of its new Purchase Delegation service, Amazon provides more insight than on the consumer page about why it ended PayPhrase:
“PayPhrase was not designed to facilitate work-related purchases by multiple persons on the same account,” the posting says. “We designed and implemented Purchase Delegation to facilitate work-related purchases by multiple authorized persons. Purchase Delegation will provide you better features to assist workplace purchasing. For example, you won’t be limited to 20 phrases per account, and you’ll be allowed to view order histories, cancel, and return products.”
In fact, up to 300 buyers can be authorized to make purchase orders on a designated payer’s account. Amazon, however, did set a number of restrictions on how the service can be used, including banning purchases of digital goods and gift cards.
McNelley credits Amazon for pulling the plug on PayPhrase when it apparently wasn’t meeting expectations, but still finding some aspects of it valuable enough to use elsewhere. “That kind of speaks to Amazon’s success, because they’ve been willing to learn from their mistakes,” she says.
