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Are Amazon Payments already bigger than PayPal?

By Chris Dawson February 14, 2017 - 4:54 pm

A few days ago we reported that over 33 million people have used Amazon Payments off Amazon with an average order value of $80. That’s website orders from businesses that offer to let you pay with your Amazon credentials in the same way that PayPal do. The interesting comparison is of course in relation to the size of PayPal?

Amazon Payments vs PayPal

As a baseline comparison, PayPal have close to 200 million user (197+ million at the last count). That means with 33 million users Amazon are way behind… but are they?

Worldwide, we know that Amazon have somewhere north of 300 million customers and every time you buy something on Amazon, in the background Amazon is processing your payment. Whilst it’s an invisible service, effectively payments on the Amazon marketplace, the 10 billion a year AWS revenues, Amazon Prime and Music subscriptions, Kindle download payments and payment for Amazon’s other ventures are all processed by Amazon payments. That means they have 50% more users than PayPal.

PayPal’s number is a known quantity, as is their $354 billion TPV in 2016. A pretty large chunk of that is eBay sales, in the last year eBay’s GMV was $84 billion.

Revealing Amazon’s true Total Payments Volume

Amazon’s revenue for 2016 was $135.99 billion, this includes e-commerce and service sales, however this isn’t quite as simple a number as it may first appear. Amazon sell as a retailer, but they also take sales on behalf of retailers thus their real sales turnover is underestimated.

Scot Wingo of ChannelAdvisor unpacked Amazon’s 2015 numbers and discovered that, taking Amazon’s commission on third party marketplace sales at roughly 10%, turned $107 billion in revenue for the year in 2015 into $225.6 billion GMV. All of that $225.6 billion (an out of date figure), would have been processed by Amazon payments so can be classed as TPV.

Updating the numbers with Amazon’s 2016 revenue of $136.0 billion and applying the same principles as Scot did for 2015, gives a TPV of some $285 billion and suddenly Amazon Payments look like they’re catching up with PayPal rapidly. In reality this is probably a grossly underestimated figure and it’s possible they’ve already overtaken PayPal, you might say even likely.

Amazon Payments Strategy

Where Amazon are lagging is in high profile website payments. A large tranche of top 100 retailers offer PayPal, but I can’t ever recall seeing Amazon Payments offered on a large retailer website. Also whilst Amazon have processed website payments from consumers in 107 different counties in the past year, they only operate in eight countries (UK, US, France, Germany, Italy, Japan, Mexico and Spain – There’s plenty of room to grow.

Amazon’s best strategy may be to leave the top flight retailers who already offer PayPal and their own payment gateways and emulate how PayPal grew, that is to encourage smaller retailers to offer Amazon Payments on their websites. It took years for PayPal to become the defacto payment gateway for small retailers but once established the larger players had almost no option but to also offer PayPal.

That should make most Tamebay readers prime targets for Amazon Payments to focus on. Are you offering Amazon Payments on your own website and if not would you consider doing so?

  • Bryn
    9 months ago

    We have offered Amazon payments for a year and hardly anyone uses it. A tiny fraction compared to Paypal and cards. I was surprised as thought would be much more popular

  • SAM
    9 months ago

    We are the same we have Amazon payments but everyone tends to use PayPal which we prefer anyway as the rates are better….

  • David
    9 months ago

    Offered amazon payments for approx 2 years
    But PayPal beats them big time
    Paypal /cards 95%
    Amazon 5%

  • James
    9 months ago

    Amazon have an atrocious customer service (for anyone other than consumers). Any quick google search can tell you this. I can’t imagine too many small sellers would want to use them.

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