Controversial

Amazon Adds Support For Merchants’ Recurring Payments

Amazon.com on June 9 opened access to its Login and Pay with Amazon feature by enabling the 240 million cardholders in its database to pay recurring subscription bills from participating merchants. PayPal and Apple already support subscription-based payments, and some believe Amazon had to follow suit to support the purported planned roll out its own smartphone in a couple weeks.

Amazon slowly is venturing into the Web-payments space. The online marketplace provider on June 9 began managing subscription payments, enabling the company’s 240 million active users with stored credit cards on its site to pay for phone, digital music and other monthly subscriptions.

The new feature within the Login and Pay with Amazon feature supports automatic payments of fixed or variable amounts. Amazon sees automatic payments helping businesses that rely on subscription-based or recurring payments to generate revenue via the Web or online, according to a company statement supplied to PYMNTS.com.

Ting, a fledgling mobile carrier and mobile-product provider, was the first company to use the service and experienced “pretty impressive results” in the first few months it tested the service, including high conversion rates – customers choosing to use Amazon over other payment methods, Amazon said. Product manager Justen Burdette said in a Reuters interview arranged that consumers who used the service spent 30 percent more on Ting’s website.

“This opens up Login and Pay with Amazon to other types of subscription-based business models, companies who want to make Amazon customers their customers, back payments with the A to Z guarantee and use transparent and low-payment processing,” Amazon said in its statement. “In fact, start-up PeachDish.com is now using the service as their only payment method.”

Consumers pay no additional fees to use the new feature, the company tells PYMNTS.com.

According to Amazon, customers can establish a payment relationship with a merchant in as few as three taps, and there is no need to fill out long forms or enter payment credentials. Once customers set up automatic payments, they don’t have to worry about payment deadlines or forgetting to pay a bill.

Amazon customers also can track payments, view authorized billing relationships and manage them on the Amazon Payments website. They can edit payment information for the merchants they have authorized, and they benefit by avoiding multiple website visits to manage several active recurring purchases.

When customers update an expired card with Amazon.com, the update applies to their payments to merchants as well. “From a customer perspective, it removes the hassle of updating payment information across multiple websites,” Amazon said.

Amazon provides the latest fraud protections, plus it protectseligible purchases under its A-to-Z Guarantee. “This ensures that the customer always receives what was ordered at the right time, and pays the right price,” Amazon said.

The new service broadens Amazon’s profitable role as a middleman for third-party sellers, which account for 40 percent of its sales, according to Reuters.

The purported June 18 unveiling of a smartphone also could aid in Amazon’s role in mobile payments. “It’s pretty clear to me that Amazon had to launch a service like this in advance of their phone announcement in two weeks,” Matt Witheiler, general partner at Flybridge Capital Partners, tells PYMNTS.com. “They are going to have to offer a way for consumers to pay for apps that are not Amazon-developed, a number of which may be subscription-based, and this payment service is a perfect way to solve this.”

Some have speculated the new service could help startups alleviate some consumers’ fears about turning over their card information to newer companies. However, Witheiler contends such issues are overplayed, given that consumers generally are comfortable today using their cards to shop online.

“If [the Target breach] has shown us anything, it’s that your card number is as vulnerable at a physical location of a top-3 retailer as it is online at a fledging startup,” he said. “I think the “fear” is more perceived by retailers than it is real, and any barrier – real or other – can be solved with PayPal. So I don’t know that what Amazon is doing is all that revolutionary.”

Indeed, Apple, which has some 850 million card accounts on file, also is ahead of the game, as it already supports subscription billing. “The name of the game is capturing more and more of a consumer’s purchase footprint,”Witheiler said.

Also, both payment networks and retailers in the not-too-distant future likely will authenticate customers using their mobile devices in both online and in-person commerce, and access card data via the cloud. Amazon could be preparing for that scenario, especially if it proceeds with launching its own phone, where simpler checkout will be a necessity, suggests Dan Rosen, general partner at Commerce Ventures.

“That’s a huge thing in mobile commerce and will required for the next stage of commerce growth through the phone,” he said. “There really aren’t many examples of a service like this where you have payment credentials on file and easy authentication and checkout without entering really any other information.”

Amazon may want to see how subscription-based services work and how adoption takes off before venturing further, but it’s really difficult to say what the company’s ultimate intentions are, Rosen said.

Amazon has been slow to venture into the payments space. A year ago, it rolled out Coins, which enable customers to prepay for purchases such as apps, games, and in-app items. The announcement came just as Microsoft announced it was doing away with its virtual currency, Microsoft Credits, citing the increased desire among game and other app publishers to use local currencies instead.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Financial Invisibles Report

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