The Problem With Amazon’s Mobile Pay Service: It’s Amazon

Written by Fred J. Aun
October 6th, 2009

Amazon on Monday (Oct. 5) renewed its push to get E-tailers to use its 1-click checkout. Thus far, Amazon has made almost no inroads with major retailers because of the perceived competitive threat from the $19 billion E-Commerce giant. But the recent torrent of new retail mobile applications may change that, as the need for a very fast checkout system is becoming much more critical.

But the major chains may not be Amazon’s ideal avenue. Smaller merchants are a lot easier to work with, and they would not likely see themselves as competing with Amazon. After all, PayPal has done quite well with retailers that, to varying degrees, compete with PayPal parent eBay.

The Amazon Mobile Payments Service (MPS) for Developers and Merchants gives retailers the capability to “extend Amazon’s 1-Click checkout experience” to customers shopping on their M-Commerce sites. Essentially, it simplifies the mobile payment process for customers who have 1-Click accounts with Amazon, meaning they’ve already provided their payment and shipping information.

“Amazon customers can now also make purchases on third-party sites without needing to set up separate payment accounts—they simply use the payment information in their existing Amazon accounts,” said Amazon Director of Mobile Payments Howard Gefen.

The Amazon Payments system might work great, but what self-respecting, multi-billion-dollar merchant is going to love an Amazon logo appearing on its M-Commerce site’s payment page?

“It’s hard to imagine a major retailer using Amazon payments rather than their acquirer. Other players like Billing Revolution can step in to do the same thing without requiring the use of a full-service acquirer,” said Todd Ablowitz, president of the Double Diamond Group, an electronics payment consulting firm. “How will serious retailers appreciate sharing the stage with Amazon? I question their appetite to do so.”

Tom Emmons, the mobile team leader at Sears Holdings, said that while the Sears and K-Mart mobile sites offer third-party payment options, including PayPal, he couldn’t envision adding Amazon as another way for Sears2Go or Kmart2Go customers to pay for purchases.

“We’re not a partner of theirs,” Emmons said. “If we were, I might change my mind. Maybe. But we have our own answer to this with our express-pay feature.”

He said Amazon MPS is “interesting” but asserted that the importance of 1-Click checkout on mobile devices might be a bit over-rated. Although that sounds counter-intuitive, because it’s significantly more troublesome to input credit card and shipping information on a cellphone than it is while at a PC, Emmons said the key is smart mobile site and/or mobile app design. “On mobile, particularly with a mobile app, the 1-Click checkout is less-relevant than it is on the Web because we’ve got full control over the user interface and we can load all the data and have customers check-out seamlessly,” he said. “You don’t really get anything by having 1-Click. It’s slightly faster, possibly.”

Emmons also questioned how Amazon MPS would work with more complicated M-Commerce scenarios, like those offered by Sears, where customers can schedule appliance installations, arrange service calls and opt for in-store pickups.

Nevertheless, Emmons predicted that many smaller retailers, those in need of a simple way to give their mobile customers easy payment options, will adopt the Amazon MPS. “My guess is companies will just start owning products and will leave the whole checkout process to Amazon,” he said. “What Amazon has is almost everybody’s E-mail and credit card information. It does make for a smooth checkout.”


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