In Alternative Payment Fight, Amazon Wants To Reverse Google's Move

With the E-Commerce alternative payments space heating up, the market is getting ready for a nasty fight for third-place between Google and Amazon. EBay's two contenders in the race—PayPal and BillMeLater—are now essentially tied with each other for having the most large retailers as clients.

With EBay with a seemingly tight lock on the first two slots, it's been interesting watching two other Web pioneers figuring out what to do. Google had invested in BillMeLater and was hoping to ride that horse against PayPal, until PayPal bought all of BillMeLater. BillMeLater quickly then lost its Amazon client and the war was on.

Google hasn't been faring especially well, with some seeing Google's move in April to boost prices as desperate. Then on Thursday (April 30), Amazon counterpunched, offering to waive fees for five months for retailers who would be new customers for its Amazon Payments program.

The Amazon offer was quite limited, excluding any existing consumers, having the fee waiver only lasts five months (from April 29 through Sept. 30). Technically, it would be five months for those who signed up immediately. The deal isn't for five free months, it's free transactions until Sept. 30, apparently regardless of when a merchant signs up. The deal also has an especially low ceiling, with Amazon saying that the fees will start sooner than Sept. 30 if $2 million or more is sold.

Those limitations aside, it's a clever offer to make right after Google Checkout is getting guff for a price adjustment that seems to be a price hike. Amazon presumably isn't going after large retailers and is quite content to attract legions of smaller players around the country. Not only would a $2 million ceiling make little sense for a major chain, but the cost in terms of dollars and operational disruptions of adding a payment option would easily blow away the savings from five months of fee waiver. (Not that a major chain would have any trouble negotiating five months of fee waiver as part of a routine deal.)

For the smaller player, the interest in accessing Amazon's credibility and relatively hardened E-Commerce mechanism is high. For them, those fees could be killers, which is why an almost half-year waiver could very well bring in a lot of serious tire-kickers. The ability for consumers who are already using Amazon to use payment information from their accounts without the need to re-enter the information might make this an interesting opportunity for them to get a ready-made installed base of prospective customers.

In this race, it may not be crucial who gets the's and's of the world. The ocean of smaller retailers—in total—could be a much more profitable prize.