Taking your credit card and bank information and buying stuff for yourself is a process that, for a long time, was dominated by PayPal. Then along came Apple Pay and Google Wallet, to help you pay for things both online and in the real world using your phone. Amazon hired former PayPal retail services wizard Patrick Gauthier as a vice president at the beginning of 2015. He was tasked with finding a way to compete with the emerging NFC (near field communication) technology.
The result is “Pay with Amazon.” Similar to how Kickstarter used to use your Amazon account information to verify you as a supporter, Pay with Amazon buttons on third party retail sites will let you use the information Amazon has stored in your profile to make purchases that aren’t with Amazon. Amazon takes a 2.9% cut from each transaction, plus a variable fee of up to 30 cents.
This week, Amazon expanded their pay service to include mobile apps. Now your in-game purchases might be paid using the credit card you’ve got stored in your Amazon account.
The criticism of Pay with Amazon has always been whether or not developers and outside companies want to let the retail giant know what their customers are buying from other businesses. Gauthier insists that breaking trust with third party retailers would be a detriment to them:
“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.
The third-party marketplace business now accounts for almost half of Amazon’s sales. Expanding beyond their own site’s customer base could pose them as a real threat in the payments industry, but there’s no guarantee that app creators will want to use its services. Amazon is carefully choosing which apps they’re letting their pay buttons appear on, as they don’t want to partner up with companies that would compete too directly for their online business.
Right now you still have to leave your shopping app to launch the Amazon app and log in there. But Amazon has over 200 million user accounts worldwide, which is a lot for Apple Pay and PayPal to compete with once Pay with Amazon starts showing up on your smartphones more and more.