Amazon says it is finally ready to turn its huge customer base into a big payments business outside of Amazon. For real this time.
The e-commerce giant is bringing its "Pay with Amazon" buttons to mobile apps, while "tripling down" on placing its Pay with Amazon buttons on websites in overseas markets like Japan. The moves are the latest in the company's on-again, off-again efforts to take advantage of the more than 200 million customer accounts it has on file by processing payments on websites outside of its own walls.
Earlier this year, Amazon hired PayPal vet Patrick Gauthier to lead a newly created team dedicated solely to building a payments business across the Web and app world. The payments industry is watching closely. For years, it has been waiting for Amazon to become a real player, perhaps challenging PayPal along the way.
But the initiative has moved in fits and starts — a digital wallet project, for example, was killed earlier this year before it even exited beta testing. And the same line of questioning has hung over Amazon's payments efforts at each turn: How many online shops will really want to get in bed with Amazon, which sells everything under the sun, and let it get a view into their transactions?
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Amazon has long downplayed this critique, telling Re/code last year that there's a barrier between the external payments business and the rest of the company, and that Amazon only sees transaction totals, not the specific items in each order. The company has also said there are plenty of transaction types that aren't competitive with Amazon; one of its most well-known payment clients in the U.S. is GoGo, the Internet provider on commercial flights.
Amazon's new head of external payments, Gauthier, reiterated this defense in an interview earlier this week, saying the worst label an Amazon project can carry is "trust-buster." He also pointed to the growth of the Amazon Marketplace, where outside merchants sell their goods competing against Amazon itself, as an example of Amazon doing good by other merchants. The third-party marketplace now accounts for 46 percent of all goods sold on Amazon.
"What do you think would happen to that business the instant we became even within a mile of breaching the trust of those merchants?" he asked rhetorically.
Gauthier said the external payments business now has the proper internal structure and focus to be successful and is encouraged by early signs. Payment volume for the "Pay with Amazon" business has grown 180 percent year over year, he said, though the company did not say off what revenue base, in typical Amazon fashion. Growth has been fueled by launches in countries besides the U.S., including Germany and Japan.
Gauthier said companies that add an Amazon payment option are more likely to see completed purchases. People who place items in their online shopping cart tend to finish the purchase more often than they would otherwise, Amazon found. It also increases the number of repeat buyers.
Still, there are signs that the business still faces real challenges. Its launch partner for its in-app business, for example, isn't a splashy one — it's GolfNow, a tee-time booking service. Amazon only has a handful of well-known payments clients, including the contemporary fashion retailer All Saints and bicycle and watch seller Shinola.
The in-app payment method is also nowhere as smooth as Apple Pay; Amazon shoppers are booted out of the shopping app they're using in order to confirm their payment details on Amazon's mobile website.
Gauthier said his unit is targeting businesses with annual sales of $1 million to $1 billion, so many won't be household names. It's a huge range, he acknowledged, but he made his goal clear: Sign up merchants that are big enough to have an impact, but that aren't Amazon's very biggest competitors.
The company's commitment to try to build a real business was apparent recently in another way: More than 60 Amazon employees attended the Money20/20 payments conference this week in Las Vegas.
"What people never realize or truly understand about Amazon is that part of the recipe for success is daring to try things you have no idea whether will succeed or not," he said, referencing payments projects that have flopped. "And if you think that you have a notion of how to succeed … you try again."
—By Jason Del Rey, Re/code.net.
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