SAN FRANCISCO – On Tuesday, internet retail giant Amazon (NASDAQ:AMZN) took a swipe at eBay’s (NASDAQ:EBAY) Paypal unit with the launch of a new service that will make it easier for Amazon’s 215 million customers to purchase items online.
The new service called ‘Login and Pay with Amazon’ allows shoppers to buy products from participating websites using their existing Amazon account information. For merchants, this will give them access to more customers, and for customers they can access Amazon’s 1-Click purchase option.
According to Tom Taylor, Vice President of Amazon Payments, ‘Login and Pay with Amazon enables companies to make millions of our customers their customers by inviting online shoppers with Amazon credentials to access their account information safely and securely with a single login.’
Analysts view Amazon’s new service as a direct challenge to PayPal. The eBay subsidiary currently dominates the online payment business. However, their simple model of letting customers shop on affiliated websites using the customer’s existing PayPal credentials has faced several challenges over the years but usually from start-ups, not an internet company with a reputation for disrupting markets and a customer base in the hundreds of millions.
For Amazon, the move into online payments is an opportunity to expand their customer base while offering retailers access to a larger market, and potentially integrating the retailers into Amazon’s massive distribution network.
According to Ash ElDifrawi, Chief Commercial Officer of Gogo In-Flight (NASDAQ:GOGO), ‘we’re excited to see the results once we start offering our customers the bundled solution of Login and Pay with Amazon towards the end of this year.’ Gogo is already using Amazon’s basic payment service but is planning to upgrade to the new service in coming weeks.
While the new service is a definite challenge to PayPal only time will tell how successful it will be with customers and retailers. A previously launched service, called Checkout by Amazon, failed to gain traction, as some e-commerce companies were concerned about sharing too much information with a potential competitor.
While ‘Login and Pay with Amazon’ could give PayPal a genuine competitor in the online payment space, the market took a wait and see attitude on Tuesday as shares of both Amazon and eBay were down on Tuesday.