Amazon Payments from the Online Seller's Perspective

Amazon.com is now offering developers the ability to integrate its Amazon Payments service with their websites and applications through its new Amazon FPS (Flexible Payments Service) program, still in beta. At the same time, the company changed some of the language on its pages describing Amazon Payments to account for the fact that qualified third-parties who integrate with Amazon FPS can now receive money directly from senders.

Prior to the launch of Amazon FPS, Amazon payments worked exclusively on the Amazon marketplace and on the websites it powered (such as Target). Amazon.com processes all payments on behalf of its third-party Amazon Marketplace merchants. With Amazon FPS, approved merchants can integrate the payment service directly on their own websites and receive money directly from customers in a service similar to Google Checkout. A major difference between Amazon Payments and competitive offerings is that merchants must do some technical tinkering through the Amazon FPS "web service" in order to offer Amazon Payments on their websites or applications.

Amazon.com seems to have deliberately downplayed the Amazon Payments aspect of the announcement, focusing instead on the service as a technology for developers. But the heart of Amazon FPS is Amazon Payments. AuctionBytes in fact had difficulty getting details from Amazon's public relations department on how Amazon would handle merchant disputes over chargebacks.

Amazon Payments has the lowest protection for sellers in terms of chargeback disputes. Amazon will reimburse sellers for eligible chargebacks up to a total of $2,500 per calendar year. This compares to $5,000/year for PayPal and $10,000+ for Google Checkout. While PayPal and Google Checkout are specific about what conditions sellers must meet in order to be protected, Amazon is shy on details (see accompanying chart).

The seller protection policies of all three programs exclude "intangible goods" such as services and digital content, and each excludes certain categories or items, such as alcohol and gambling. It appears that Google Checkout and Amazon Payments protection policies are exclusively for US merchants, while PayPal covers qualified US, UK and Canadian merchants.

Unlike Google's offering when it launched, Amazon Payments already has an installed base of users - 69 million Amazon shoppers. And Amazon FPS can be set up to send and receive money using bank accounts or Amazon Payments balance transfer in addition to credit cards.

Unlike PayPal, Amazon FPS charges developers less when the actual cost to process a payment is lower, rather than charging the same fixed fee for all payment methods. Amazon FPS is particularly cost-effective for merchants processing micro-payments for such things as digital content.

Amazon FPS also allows each party to a transaction to place conditions or rules around that transaction (such as "allow only five transactions or $50 per month," or "refuse payment after August 1").

Of the three programs, PayPal is the only payment service allowed on the eBay marketplace. eBay did not respond to AuctionBytes' inquiries about when it would modify its Accepted Payments policy to either accept or ban sellers from accepting Amazon Payments as a payment method in listings.

Because Amazon.com has not widely marketed the payment service to merchants - instead, focusing on developers - many online sellers appear to be unaware of changes to the Amazon Payments program.

Brian Ouellette of ShoeWallet.com (http://shoewallet.com) sells shoewallets on his own website (powered by Yahoo Stores) and through the Merchant@Amazon (Seller Central) program on Amazon. When contacted, Ouellette said he was unaware that Amazon had opened up the Amazon Payments program, but said given more information, he would likely welcome such a program with open arms because the Amazon brand is so recognized. Amazon has so many users - anything to make shoppers feel comfortable buying from him would be a good thing, he said.

Zu Ahmed of BlingAddict.com (http://www.blingaddict.com), who also sells through the Merchant@Amazon program and on eBay, said, "I don't know enough about it yet to say if I'm really for it or not. I do know that people trust Amazon Payments, and that in itself is enough to get me to consider it."

Small merchants like Ouellette and Ahmed may have to wait before giving Amazon Payments a try. The Amazon Payments home page is geared to shoppers, and the invitation to try Amazon FPS on that page is for "developers," not merchants. Many merchants' best hope to try Amazon Payments through FPS may be through third-party ecommerce-management and hosting services that integrate with the payment service. However, the Amazon FPS program is in beta, and given the company's track record, it will likely keep a tight reign on who may use the service and how they use it.

Related Links

"Amazon Launches Online Payment Service - for Developers"
http://www.auctionbytes.com/cab/abn/y07/m08/i03/s00

Amazon Payments User Agreement
https://payments.amazon.com/sdui/sdui/about?useragreement

Amazon Payments Acceptable Use Policy
https://payments.amazon.com/sdui/sdui/about?acceptableuse

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