Amazon’s Partnership Program threatens PayPal in digital payments space

Amazon’s ambitious plans for Amazon Payments could make the retailer a real threat to online digital payments providers, according to an analyst with Verdict Financial.

Amazon chose the April 2016 Money20/20 event to announce the launch of the Amazon Payments Global

Amazon’s Partnership Program threatens              PayPal in digital payments space

Partner Program. Amazon intends to use this program to expand its Amazon Payments checkout service – currently available to individual merchants only – to a far larger range of online retailers via partnerships with payment processors and e-commerce platform providers.

Amazon Payments currently operates similarly to a digital wallet, in that it allows consumers to access and use their stored payment card details at any online retailer that accepts Amazon.

Sam Murrant, Senior Analyst for Verdict Financial, says: “Amazon can offer prospective partners a large user base – it currently has 285 million account holders, of which 23 million have already used their Amazon credentials to pay on other sites.

“The partnership program is likely to be successful from a merchant standpoint – especially given the perks Amazon is offering its partners, which include account management and co-marketing – but it still needs to be able to compete with other digital wallets as a consumer service, as competition is rapidly increasing in this sector.”

According to Verdict Financial’s Consumer Payments Insight Survey, the most important drivers of payment tool use online for consumers are comfort (22.7% of respondents stated that this was the reason they used their preferred payment tool) and convenience (25.8%). Any tool hoping to gain significant market share will need to be both familiar and convenient to use.

Murrant continues: “Consumers trust the Amazon brand with their payment information and are familiar with logging in to Amazon to shop online, so it is not difficult to imagine them choosing to use a “Pay with Amazon” button at other online shops.

“However, the requirement of a password puts Amazon’s services a step behind PayPal in terms of convenience, which has already rolled out a password-free option in One Touch.”

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