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EcommerceBytes-NewsFlash, Number 1683 - December 12, 2007 - ISSN 1539-5065    2 of 5

Amazon.com Takes Another Step in Online Payments

By Ina Steiner
December 12, 2007

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Amazon.com announced it is making an equity investment in Bill Me Later Inc., and has signed an agreement to make the Bill Me Later payment option available on the Amazon marketplace. Online payments are nothing new to Amazon.com, which processes all payments on behalf of its third-party merchants and recently introduced Amazon Flexible Payments Service (FPS) for developers (http://www.auctionbytes.com/cab/abn/y07/m08/i03/s00).

Bill Me Later has been catching steam and is accepted on many retail websites that want to offer more payment options to consumers. The service acts as a credit account, providing shoppers the ability to make purchases without using credit cards. eBay's PayPal service launched a similar service in August called PayPal Pay Later (http://www.auctionbytes.com/cab/abn/y07/m08/i02/s01).

Wall Street analyst Scott Devitt of Stifel, Nicolaus & Company saw the Amazon-Bill Me Later move as a missed opportunity for PayPal. He wrote in a research report Tuesday, "Amazon has essentially stepped into a position that could have and should have been eBay's. PayPal would have been able to integrate Bill Me Later across its global platform and mitigate/monitor a long-term competitive threat to its franchise."

PayPal spokesperson Amanda Pires said, "We didn't need to acquire a third party when we have expertise in promotional financing and in deferred credit." If merchants integrate with PayPal Express Checkout, Pires said, they can offer consumers a full wallet: bank balance, credit card and deferred payment, adding that PayPal is a global company that serves merchants of all sizes, not just the large-merchant space.

Amazon.com did not disclose the terms of its investment in Bill Me Later Inc. The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2008.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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