|Wed Aug 10 2011 23:16:32|
PayPal: It's Everywhere You Want to Be - Except Amazon
By: Ina Steiner
PayPal is making inroads among large online retailers with its merchant services offerings, but the toughest nut to crack happens to be the largest online retailer: Amazon.com. No doubt PayPal would be ecstatic if it could be an accepted payment method on Amazon.com's marketplace. But what would it take to make that happen, given that the two companies are fierce competitors both in marketplaces and in payments?
Might there come a day when you could pay for your Amazon.com purchases using PayPal? Right now, it's hard to imagine Amazon allowing eBay's online payment service on to its site in the foreseeable future. But for PayPal, it's the holy grail of retail accounts.
We asked Amazon if it would ever consider offering PayPal as a payment method; a spokesperson said the company had a long-standing practice of not discussing what it may or may not do in the future. There are clues to indicate what the answer might be, however.
The first indication goes back to 2008 when Amazon kicked off Bill Me Later, a service it had liked so much that it had invested in the company (some pegged the investment at 10%). But once eBay acquired the company, Amazon said see you later and removed the service - even though numbers likely showed incremental sales from offering customers transaction-based financing.
Another major sticking point: eBay does not allow Amazon Payments on its site.
The third and probably one of the most important reasons why Amazon would be reluctant to let PayPal onto its site is because it hates sharing information. With online payments, it's much more than a service for the convenience of buyers and sellers. Amazon would be opening the doors to closely guarded transactional data on its marketplace.
Lest you think eBay could keep information in silos within the organization, look no further than the eBay versus Craigslist trial in 2009 when executives testified they shared confidential, proprietary Craigslist data with eBay's classifieds division.
There's precedence for eBay competitors opening their doors to PayPal, including Etsy and Bonanza, but those online marketplaces don't have their own online payment service.
Finally, PayPal and eBay are aggressively going after the mobile payments and mobile commerce space. That's an area Amazon.com will not want to cede. But if PayPal wins as big there as it hopes (and it would take some time for that to happen) and ultimately becomes the winning mobile wallet, that could open a chink in Amazon's wall that could make it reconsider its PayPal ban.
Let us know if you can envision a day when you use your PayPal account to pay for a purchase on Amazon.com.