On Tuesday (July 29), Amazon introduced Amazon Payments, which allows customers to use the credit card and shipping data on their Amazon accounts with other retailers who subscribe to Amazon Payments.
With this rollout, Amazon officially joins the ranks of eBay's PayPal, BillMeLater and Google Checkout as directly offering an alternative payment system. Before this, Amazon still had some skin in the game, as it's been a minority investor in BillMeLater.
The core part of Amazon Payments is called Amazon Simple Pay, and it's the service that allows customers to use their Amazon information to make payments on other sites. The other part of Amazon Payments is called Checkout By Amazon, and it adds several features to Simple Pay, including sales tax calculation, buyer feedback and Amazon's 1-click feature.
Amazon released a list of a handful of retailers who have signed on—including Abacus24-7, Fat Brain Toys, Jockey, MovieGoods and DataVision, according to Amazon spokesman Andrew Herdener—but did not release the names of any major retailers. It's unclear whether any major merchants have agreed to use the service.
Amazon said there are no start-up or monthly fees, but retailers who subscribe to either option will pay a per-transaction fee based on the purchase amount. For all transactions worth fewer than $10, retailers will be charged five percent plus another 5 cents per transaction. For transactions worth more than $10, the merchants will be charged 2.9 percent plus 30 cents.
There are also discounts if the retailer reaches a certain volume of transactions per month. For retailers whose monthly payment volume is between $3,000 and $10,000, they will be charged 2.5 percent plus 30 cents. For $10,000 to 100,000, it's 2.2 percent plus 30 cents and for monthly payments greater than that, it's 1.9 percent plus 30 cents. Given those volume discount levels, it certainly seems that Amazon is positioning this service for smaller retailers.