Amazon launch subscription based payments

Amazon have launched what’s effectively a PayPal competitor – Amazon payments. The aim is to enable Amazon’s 240 million customers to pay for services such as a monthly phone bill or a digital music subscription. Consumers will also be able to use credit card details stored on Amazon to make purchases on third party sites using their Amazon stored payment details.

Amazon positioned the launch around buyer confidence, they’re aiming to attract start-ups and fledgling companies to use the new recurring payment service with the premise that consumers might not want to give their financial details to a company they’ve never heard of before. However with the Amazon brand there to protect them consumers should have no worries purchasing those companies services.

One difference to PayPal is that consumers will have no stored balance from which payments can be drawn. It’s simply a digital wallet type service where Amazon bill the consumer’s credit card and hand the funds over to the supplier (less of course a cut in the form of Amazon’s fee).

Amazon VP Tom Taylor explained to Reuter “We hope whoever the next Spotify out there is thinking about Amazon”. If Amazon land a few companies as successful as Spotify they’ll probably be pretty pleased with the payment transaction volume. However there’s more to it than a few payment processing fees – every time someone pays with Amazon they’re that little bit more invested in the Amazon brand and that much more likely to buy on Amazon, download a movie from Amazon Prime Instant Video or read a book on their Kindle.

Amazon are making moves on so many fronts they’re starting to resemble Apple. Should PayPal be worried on the payments side, probably not in the short term, but consumers starting to use Amazon for ever more services should concern eBay Inc management.