As online retailers compare the pros and cons of using Amazon Payments, it would appear that many have found the former category to outweigh the latter.
Although Amazon does not disclose the number of businesses that offer Amazon Payments in their checkout process, a recent story by Bloomberg shares that more than 23 million eCommerce customers have used their Amazon accounts to pay for purchases on non-Amazon websites since the offering was launched in 2013.
And while some online retailers that use Amazon Payments are on the larger end of the spectrum — the Bloomberg story cites Southwest Airlines and in-flight Wi-Fi company Gogo as being among them — there is, as the outlet posits, a particular appeal for smaller businesses.
As Wedbush Securities Analyst Gil Luria commented to Bloomberg: “There’s a market for selling your soul to the devil. When you accept Amazon Payments, you get access to the coveted Amazon customers. The tradeoff is you are opening your kimono to your biggest competitor.”
The reason that small businesses are willing to risk that exposure (as it were)? The simple — but highly valuable — fact that Amazon Payments makes transactions easier for their customers.
Peter Grant, general manager of AuthenticWatches.com, told Bloomberg that about a quarter of his orders are paid for through Amazon Payments. Because the service saves him from having to verify his customers’ identities, for one, he describes it as “an order-saver.”
Josh Harbour, co-owner of the online women’s clothing store Red Dress Boutique, meanwhile, tells the outlet that, within a week of implementing Amazon Payments in April, about 20 percent of the store’s orders were made through it.
“It’s easy to think of Amazon as a big bad competitor, and that’s true,” Harbour commented. “But merchants have to find ways to compete with them in some areas and work with them, too.”
What’s good for Amazon Payment-enabled merchants is good for the eCommerce giant itself, of course, with the Bloomberg story noting that it is making strides to catch up with what is arguably the major player in the online payments transaction space: PayPal.
While the outlet points out that PayPal remains the top choice for online payments, having processed $82 billion in transactions for close to 180 million consumers, some small businesses — like handmade bag company R. Riveter and the aforementioned Red Dress Boutique — have reported that their customers actually prefer Amazon’s service.
SMBs may emerge as the most likely long-term option for Amazon Payments to compete with PayPal, with Jordan McKee, payments analyst at 451 Research, telling Bloomberg: “We will never see Walmart or Target take any measure to align themselves with Amazon. [Doing so would be] retail suicide.”