The service today is an interesting means of allowing consumers to, in effect, subdivide their payment authorization so that a child or an employee can make purchases, but with specific dollar limits and related controls. It also allows consumers to have different addresses (home, work, the in-law residence where the holidays will be spent, etc.) associated with different phrases and potentially different payment methods (the corporate credit card for office deliveries, a personal card for home, etc.). But Amazon's vision for PayPhrase goes beyond online; it includes mobile and, especially, in-store options, said Matt Williams, the general manager for Amazon PayPhrase.
"We want [PayPhrase] to be used anywhere they want to pay, anywhere a customer happens to be," Williams said, although he declined to say whether it has been seriously discussed yet with any major brick-and-mortar retail chain.
As retailers struggle to explore payment alternatives, the idea of bringing such a third-party online service into the checkout aisle isn't so far-fetched.
PayPhrase is part of Checkout By Amazon, a payment service that allows the various retailers to accept it rather than payment cards. Those retailers benefit because they never have to house any data-breach-inducing payment data. Among the retailers Amazon typically touts as using its Checkout By Amazon service are DKNY, Jockey, Patagonia, Buy.com, J&R Electronics and Car Toys.
By allowing a customer to confidentially communicate his PayPhrase and password (presumably by keying it in, as even whispering the words would present a huge security risk), chains may get help dealing with both interchange issues (if, for example, PayPal or another alternative payment method was ultimately paying) and PCI concerns (with far less data housed, there are far fewer regulatory concerns. And if the chain ever went entirely Amazon, it could theoretically ditch PCI altogether).
But there may even be a simpler route. The very nature of PayPhrase is ideal for mobile payments, and Williams confirmed that it will soon be on Amazon's iPhone app and then likely on its BlackBerry app. "We don't have it available on the iPhone app, but we will certainly have it available on the iPhone app in the future," he said. When asked about BlackBerry, he said, "We're certainly looking at both."
It's not hard to envision consumers using PayPhrase to authenticate a purchase and then simply have their cell phone interact with the POS (either by the phone displaying a barcode that may be swiped or a direct POS communication).
PayPhrase itself operates on different security levels. When accessed remotely, it relies on the phrase and the PIN and can perform purchases. To access administrative options, such as reviewing all of the account's PayPhrases, the system needs to see a cookie for a third authentication. That means consumers must be using their main computers.
Neel Grover, the CEO for Buy.com, said he envisions a time when his E-tail firm may partner with a brick-and-mortar shop to give Buy.com physical distribution points. Whether or not using PayPhrase in-store is a near-term possibility is a very different issue, he said. "There can be a big gap when crossing the chasm of in-store" from online, Grover said, adding that having consolidated payment methods will prove crucial. Still, he added, "you want to tackle what the stores are ready for."