updated 12:28 pm EDT, Mon June 9, 2014
Subscription via Amazon payment platform intensifies competition with PayPal
Amazon is expanding the reach of its payment platform, by providing subscription-based payment options to customers, claims a report. Keen to take on PayPal, the retailer is said to be launching the service later today, which will let start-ups and other companies charge a monthly fee, such as a mobile phone bill or music subscription, to cards stored to a customer's Amazon account.
Testing has already taken place over the last few months, with mobile operator Ting providing the Amazon payment option for bills. In an interview with Reuters, Ting product manager Justen Burdette claimed customers using recurring payments through Amazon spent 30 percent more on Ting's website.
Amazon vice president Tom Taylor claimed that Amazon operating as a middleman for payments gives a sense of security to potential customers unwary of a small company or unknown start-up. "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. We hope whoever the next Spotify out there is thinks about Amazon."
Currently, Amazon has more than 240 million active users with credit cards stored on its servers, with its existing middleman status for item sales accounting for 40 percent of its sales, a role typically played by PayPal. The expansion into online payment subscriptions is not the only way Amazon is looking to compete against PayPal, with two reports earlier this year suggesting the retailer would offer a converted Kindle tablet as a point-of-sale system.