Amazon wants to make sure history repeats itself.
Years ago, e-commerce merchants competing with eBay were hesitant to work with its payments unit, PayPal, for fear of benefiting a competitor. Eventually, most merchants saw the benefit in doing so because it increased sales.
Amazon is banking on the same reasoning in introducing the Amazon Payments Global Partner program, a move stimulated in part by the Seattle-based e-commerce giant's recent success in convincing more online merchants to deploy its one-click
Amazon's new global partner program focuses on working with online platform providers and developers, similar to how mainstream payment technology companies work with independent sales organizations to reach new clients.
The program becomes a logical next step for Amazon in a move also designed to plant its feet more firmly in turf most often left for PayPal to rule, and one that others such as Visa Checkout and MasterCard's MasterPass are encroaching upon as well.
Amazon's program differs from the ISO model only in that providers who have already joined the program such as Shopify, Future Shop Co. and PrestaShop benefit in offering a value-added service to their own merchants, as opposed to pushing the solution toward other providers as an ISO for Amazon.
"It is kind of like an ISO setup for increased exposure, and it offers access to more data as part of the trade out with the merchant," said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC. "The merchant gets more sales, but may have to give up some customer data to Amazon."
And that is not such a bad thing, if the merchant is savvy enough to look to the future of embedded payments, Crone added.
"This kind of data serves like a deep link to more than payments," Crone said. "It's the path to new delivery services, things we haven't even imagined yet today."
In the short term, it is likely Amazon can use this program to move further into mobile apps, embedded payments and maybe even the physical point of sale, said Crone, whose firm estimates there are 3.4 billion users of the various embedded payment products worldwide.
"It also would not be surprising if PayPal actually supported Amazon Payments through Braintree, which supports all payments," Crone added. "Merchants will be motivated to accept Amazon Pay because they want to reduce abandonment rates. PayPal has proven that it can increase sales by stopping abandonment.”
Amazon's promotion of its one-click payment system will position the company well as it expands its infrastructure, said Brian Riley, principal executive advisor with CEB TowerGroup.
“By working with providers, Amazon picks up masses of merchants instead of just working on it themselves with onesies and twosies,” Riley said. “These providers rely on these transactions anyway, so it’s not so much as a competing partner, it’s more of a synergy to bring up the merchant.”
The payments industry's history has been dotted with so many restraint-of-trade issues, it is hard to imagine PayPal would turn around and ask for exclusive arrangements to keep Amazon off merchant sites, Riley said.
More likely, PayPal will view Amazon’s program as a way to increase its own exposure through “inclusion, rather than exclusion,” Riley added.
Amazon will provide pre-integration services and consultation to providers through the global partnership program. In turn, those providers can offer merchants benefits such as data sharing and easy integration services. The program is free for developers who are invited to participate in the initial rollout in the U.S., Germany, Japan and the U.K.
Amazon enters the payment processing field from a position of strength with its “hundreds of millions of people worldwide” with Prime and non-Prime membership accounts, said Tom Caporaso, CEO of e-commerce solutions provider Clarus Commerce, which also owns FreeShipping.com.
“The accounts give it a remarkable level of penetration at the outset,” said Caporaso. “The trust that so many of those shoppers have in Amazon will no doubt make the option of clicking the Amazon payment button at check-out highly appealing.”
Amazon did not respond to inquiries prior to deadline, but the program was surely part of Patrick Gauthier's mission when he left PayPal to work for Amazon last year as its vice president of Amazon Payments.
“The program provides partners with the tools and resources needed to extend the trust and convenience of the Amazon experience to their merchant customers,” Gauthier stated in a company announcement. “We are working together across geographies and industries to help merchants grow and create experiences that delight customers throughout the shopping journey.”
The program includes Premier Partner, Certified Partner, and Certified Developer levels for e-commerce platform providers and developers, with varying degrees of benefits and training attached. As members of the program, partners are eligible to receive account management, planning support, technical resources and training, partner directory listing and partner designation with exclusive logos. Certain partners may also be eligible for co-marketing.
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