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 (NASDAQ: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. (NASDAQ: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 (NASDAQ: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.
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