Amazon's Entry Into Online Payment Business Challenges PayPal

Amazon.com Inc (NASDAQ:AMZN) will allow customers to use its platform to make online payments for services in an attempt to challenge PayPal, which is owned by eBay Inc (NASDAQ:EBAY), according to a new report, which added that the new service would expand Amazon’s role as a “middleman” to include third-party sellers.

Thanks to the new service launched on Monday, Amazon’s more than 240 million active users will be able to use their credit card details, stored on the company’s website, to pay for various services, including paying off monthly bills and subscription fees for online products such as digital music. Amazon will charge vendors a fee on every transaction made through its platform, Reuters reported.

“You should see it as one of many things that we'll do to expand where people might think about Amazon helping them,” Tom Taylor, Amazon’s vice president of seller services, told Reuters in an interview.

Amazon was reportedly working on the new service for several months with start-ups including Ting, a Canadian mobile phone company owned by Tucows Inc (NASDAQ:TCX). According to Justen Burdette, a product manager at Ting, people using Amazon’s new online payment service, while it was being tested, spent 30 percent more on products listed on Ting’s website.

While some merchants are said to be worried about giving away customer details to Amazon, Taylor said that the company only collects information about the dollar amount of each transaction and not any “item-level information,” Reuters reported.

According to Taylor, users should feel secure about handing over their credit card details to Amazon.

“If you think about giving a merchant that you may not know very well the right to continue to charge your credit card in the future, you really want to know that a good relationship with Amazon stands behind that,” Taylor told Reuters.