Amazon Takes On eBay’s PayPal With New Service

The status of PayPal as the web’s reigning leader of payment and money transfer services via the Internet is simply unarguable. PayPal, as an e-commerce business, charges a fee for payment processing of online vendors, auction sites, and other corporate users. The company which was bought by eBay (EBAY) for $1.5 billion in October 2002, proved to be a smart business move. After phasing out its own competing service, ‘eBay Payments by Billpoint’, eBay not only gained control of the popular electronic payment service favored by many of its customers, but also acquired a great asset, which currently generates more than 23% of eBay’s total quarterly revenues.

Drawn by PayPal’s financial success, Google Inc. (GOOG) in 2006 entered the market with its own competitor, dubbed ‘Checkout’. However, in terms of traffic growth and market share, it’s been no contest. PayPal still dominates this space.

Amazon.com (AMZN) seems to be following Google’s example aiming at taking on its rivals by unveiling its own competitor, an online payment service called ‘Checkout by Amazon’ along with a more slimmed down version called ‘Amazon Simple Pay’. The new service, according to Timesonline, will give online retailers the option of having Amazon manage their payments and allow them to avoid having to register customers afresh.

 

"Consumers trust Amazon - they’ve been shopping there for years,” Victoria Bracewell Lewis, an analyst with Forrester said. “The idea that you have to do very little by way of registration to buy something will increase impulse buying, as well as general convenience.

 

And that’s true. Convenience, trust and quality of information are the most influencing factors for online shopping. Whether another online payment processing will find support still remains to be seen. However, one thing is for certain. A high level of competition in the sector is definitely quite healthy and underscores the sound underlying market fundamentals of alternative online payments.

Click to enlarge

Disclosure: None

Comments

[alphafemale:]

This article is incredible sparse on details. You might have well just published the headline. Where's the rest of the story?

2008 Jul 31 08:23 AM

[John Pseudonym:]

I own/run several ecommerce sites that use PayPal.

I just checked the Amazon pricing for this and I instantly come away with "no thanks".

The rates are pretty much the same as paypal - so no real incentive for me to recode all of my sites.

Here's the deal killer for me, I spend the money in my paypal account through my paypal credit card which gives me a 1.5% instant rebate.

So my net rate at PayPal is 1.4% + .30 per tranaction.

Even at the 100K a month level, I will lose money using the Amazon system.

Do these people understand anything about the payment market?

Here's the details that are sorely missing from this story:

https://payments.amazo...

For now, Amazons new system is a YAWN!

It will take some business away from PayPal as many people hold an all out hatred towards ebay and Paypal. So ebay stock looks to be the loser here as they depend on PayPal to make up for the mismanagement of Donahoe.

2008 Jul 31 10:48 AM

[User 220016:]

Is eBay's evolving business model being eclipsed by local competition?
Posted Jul 30th 2008 3:50PM by Brian WhiteReader

www.bloggingstocks.com.../

COMMENT:
7-30-2008 @ 4:26PM
Preypal Problems said...

Ebay/Paypal are going under, real soon. Wait til word breaks about the counterfeit scheme with liquidation.com, it's gonna get bad.

To see more on the counterfeit scheme, you can click the link below (If you don't like to click links, just go to youtube and type in "paypal counterfeit" without the quotes.)

IT'S UNBELIEVABLE!
www.youtube.com/watch?...

THANKS FOR THE LAUGHS PREYPAL,
INFAMOUS EBAY AVENGER!

2008 Jul 31 11:15 AM

[Jason For W...:]

my question is what will merchants do who compete with Amazon. this is basically opening the door to their customers to look at Amazon as a buying option. i know for one of our magazine subscription service clients (MagMall.com), they would not be happy to be sending customers to Amazon.

2008 Jul 31 11:44 AM

[Et tu, Brute!:]

Response to User 220016:

While the blog link was interesting, the youtube link loses complete credibility playing pothead background music. The content is excellent but will be INSTANTLY discounted and dismissed by all visitors by the other.

2008 Jul 31 11:54 AM

[no non-sense:]

The reason I never left PayPal for Google Checkout is because PayPal has almost 10 yrs experience fighting FRAUD, and protects the merchant. Neither Amazon nor Google have a clue or the expertise.

2008 Aug 01 04:38 PM

[User 220016:]

ATTENTION EBAY SHAREHOLDERS! THIS IS WHAT EBAY "LISTINGS PADDING" - STOCK MANIPULATION LOOKS LIKE!!!

COMMENT DATED 8-5-08:

www.newsvine.com/_news...

2008 Aug 05 09:46 AM

[morleyadams:]

WOW!!! the link by user 220016 is EXTREMELY INTERESTING!!!

I hope you LOOK INTO IT and write an article about the findings there!!!

2008 Aug 09 10:33 PM