Amazon Launches Payments Service - Analyst Blog

Amazon.com Inc. AMZN recently launched Amazon Payments, a service offering subscription-based or recurring payments in a bid to take on eBay's EBAY digital payment arm, PayPal. The service will enable customers to shop online with their Amazon accounts on partnering websites and is available on both personal computers and mobile devices.

The service seems to be an extension of the ‘Login and Pay with Amazon' service, which it had launched last year in order to compete with PayPal. ‘Login and Pay with Amazon' enables shoppers to make purchases on websites by logging in with their regular Amazon account details.

As per Amazon, Amazon Payments is a feature that will be included within ‘Login and Pay with Amazon.' Amazon has been testing the service in recent months with startups like Ting, owned by Tucows, and PeachDish.com.

Amazon's payment service is expected to increase its footprint in the one-click payment arena and the areas dominated by PayPal and other players, given its popular brand name and reputation for safety of its more than 244 million active customer accounts.

Following the launch of the new service, shoppers can pay for purchases on third-party retail websites and make payments of recurring charges such as monthly phone bills or subscription fees using the credit card details stored on Amazon.com. This eliminates the need to separately enter their account details for each purchase made at any third-party retailer.

Businesses planning to use the service will have access to Amazon's huge user database and can take advantage of Amazon's security. Amazon will charge a standard cut of 2.9% from retailers along with a charge of $0.30 for every transaction worth $10 or more. However, it won't charge any recurring fee from businesses for their use of the service.

This announcement follows rumors of a 3-D smartphone launch on Jun 18. It will draw the attention of mobile app makers offering subscription-based services and may lead them to take advantage of the new payment option. This will boost Amazon's recurring revenues and ramp up its mobile payments services, a sector which has grabbed the attention of other technology companies like Google (GOOGL), wireless carriers Verizon VZ, AT&T T, T-Mobile TMUS and Apple AAPL.

Amazon currently holds a Zacks Rank #3 (Hold).