Amazon to take on Google Checkout & PayPal

August 1, 2007

The buzz spilled out of the bucket today and onto the pages of TechCrunch, where Michael Arrington splashed to his 500k+ readers that Amazon has a payments platform in the works, to be announced in the near future.  Perhaps even this week.

It’s a redirect service, at least initially.  Think like Google Checkout: you’re on someone’s cart, you click buy, you go to GCheckout’s site, pay, then return to the merchant’s store.

To be competitive, Amazon’s going to have to offer lower transaction rates than even Google — and expect it to be integrated seamlessly into Amazon merchant tools.

Here’s the rate table of Google vs. PayPal:

Google Checkout 2% + $.20 per transaction (with up to 10x AdWords spend credit)
PayPal $0.00-$3,000.00: 2.9% + $0.30

$3,000.01-$10,000.00: 2.5% + $0.30

$10,000.01-$100,000.00: 2.2% + $0.30

> $100,000.00: 1.9% + $0.30

Amazon Payments Help us fill this in!

I think the impetus for this is also to save, as much as to make, money.  Amazon is already in the business of receiving micropayments for services (S3, EC2)…so by running payments through its own platform, it can save fractions of points on each transaction.

And if the platform’s any good, they’ll get residual revenue from outsiders wanting to use Payments as a way to pay off-site.

A note on Google Checkout: someone commented on TechCrunch from Big Database, who said that Checkout uses the Chase Paymentech Gateway and merchant services for processing their payments.  They’ve negotiated a bulk interchange rate and “were really just trying to make the shopping cart experience easier and
add some assurance to dealing with smaller merchants.”

Update: read my previous post on Amazon Product Ads.  Perhaps Amazon will use free payment processing to promote its new ad platform, just as Google is doing with Checkout / AdWords?


Written by Scott Hurff — scott.hurff at channeladvisor (that’s a dot com at the end — eat that, spambots!)