June 23rd, 2014
Amazon Expands Its Reach with a Recurring Bill Payment Service
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Amazon launched a service earlier this month that allows customers to pay recurring charges using their Amazon accounts. This comes as a natural extension to Amazon’s current payment system, which was introduced last fall to compete with PayPal. Their current “Login and Pay with Amazon” service already allows websites to display a Pay with Amazon button as an option during the checkout process.
Up until now, Amazon only accepted one-time purchases – now they can support recurring payments, which makes this service perfect for companies like mobile service and music streaming providers. Customers will also be able to track their subscriptions and edit credit card details all through their Amazon account.
Selling the Amazon Brand
According to Reuters, some companies may have shied away from working with Amazon out of fear of what Amazon would do with their customer data. However, Amazon vice president of seller services Tom Taylor says that they will only collect the monetary amounts of each transaction. He also believes that the heft of the brand could benefit companies: “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.”
Amazon charges a fee per transaction, but you could argue that it’s about more than the immediate profits. Amazon has slashed Kindle Fire prices, taking a hit to their profits in an attempt to get more people using Amazon services. Similarly, expanding their payment services allows Amazon to dip their fingers in more honey pots and expand brand recognition. It’s also about synergy: Amazon just announced the arrival of their first smartphone, the Amazon Fire. The device and contracts will be sold at AT&T stores, so naturally you could sign up for a two-year contract for your Amazon phone and set up your automatic AT&T bill payments through Amazon.
Will This Catch On?
Of course, PayPal is an established force in the space, and many people will stick with what they know and what’s popular. Amazon will need to convince companies to buy into their payment system. Positive feedback from one company that tested the recurring payment service – they claim users spent 30 percent more on their site if they used Amazon – should help. The fact that Amazon has more than 240 million active users doesn’t hurt either.
On the consumer end, Amazon will be banking on their devices, services and extensive ecosystem of goods, books and entertainment to convince people to handle their bills through Amazon.
Young people are also more open to the idea of banking with tech companies. A recent survey of nearly 4,000 consumers between the ages of 18 and 34 showed that 37 percent of respondents would bank with Amazon. It shouldn’t be too surprising if Amazon eventually offers banking services or acts as a middleman between a customer and a traditional bank. What better way to encourage consumers to spend money on their website than to help them manage their money?
Whether Amazon expands further into the banking sphere or not, it’ll certainly be interesting to see where they choose to go next with their ever-growing range of products and services.
Charmaine Ng is the Communications Coordinator at Credit Karma. When she isn’t writing her way through life, you can find her reading about the latest in entertainment and watching television almost every night of the week. Say “hi” @noodlemaine!
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