Offering a variety of payment options is a great way for businesses to reduce the barriers to entry for customers completing purchases. Paypal has long been the standard choice for customers who want an alternative to using credit cards on retailer sites.
In recent years, though, several competitors are emerging, hoping to get a share of the $66 billion in payments that PayPal is processing every quarter.
Amazon Payments is the newest platform on the block, and it has undergone several rebirths over the last few years to keep up with the competition.
What Amazon Payments Offers
For people who are already customers of Amazon.com, Amazon Payments allows them to shop on other websites and complete transactions using payment and shipping information that is stored in Amazon’s system. New customers can also set up an account and store payment information for future purchases. For retailers, you can easily implement a payment system that keeps the entire transaction on your website, with no popups, to minimize abandoned shopping carts and confused customers.
Where Amazon and PayPal Meet and Divide
Amazon Payments also offers businesses free account setup, integrated fraud protection, and no monthly fees. The pricing is simple at 2.9% plus $0.30 per transaction which is the same as PayPal’s current rate for PayPal and credit card processing. Both are also free for customers to use, and both lend the credibility of a big name in the e-commerce industry.
For both retailers and customers, the payment processes with Amazon and PayPal are similar. The main difference between the two is that Amazon is also a retailer, and this can cause a bit of friction with businesses that see Amazon as a competitor. The payment process may be simple for customers to use, but some companies still see it as inviting the competition to their website.
PayPal, on the other hand, has been helping people complete purchases and exchange money on the web for more than 15 years. Other than lines of credit, PayPal has no other products to offer so some retailers might be more comfortable adding those services to their websites.
Which to Choose?
Both companies have large stockpiles of loyal customers. One surprising drawback that PayPal has is the length of time it has been in business and its association with eBay. Although the two have officially split, the PayPal name is often associated with buying and selling from individuals. PayPal also encourages its users to store balances in a PayPal account although this is not necessary for consumers to make purchases.
Amazon, in contrast, has been a trustworthy retailer for more than 20 years. Its customers have been happily sharing their credit card information for decades and may feel safer when they allow Amazon to broker a transaction with an otherwise unfamiliar company. Of course, you do not have to choose one or the other. To provide options that a wide variety of customers will be comfortable with, offering both may be the best solution.