The introduction of "" on October 8 was a signal that Amazon is getting serious about digital payments at a time when other tech titans, such as Google, Apple, and Facebook, have the potential to become the go-to digital wallet for consumers.
Amazon, however, may be in the best position to take on PayPal. The company offers the unique combination of a large registered customer base, hefty resources at its disposal, and an uncanny willingness to play the long game. It's not an unrealistic scenario for consumers to use Amazon as ubiquitously as PayPal to pay for goods and services all over the Internet or on a smartphone.
"I think Amazon is one of the handful of companies that can be a threat," said Patrick Salyer, CEO of Gigya, a company that helps sites adopt log-ins from existing social networks and companies like Amazon. "There's the brand and trust associated with Amazon ... We think they have a pretty good shot."
Amazon certainly has the assets. It's a trusted shopping brand known for low prices, fast shipping, and reliable service. The company boasts 215 million active customer accounts, and its mobile app is a top shopping app in iTunes' Lifestyle section (alongside eBay). In comparison, PayPal has 137 million registered accounts.
"Login and Pay with Amazon," which allows you to pay on other Web sites using your Amazon account, builds upon the web retailer's earlier Amazon Payments effort from a few years ago. If Amazon can get third-party merchants to integrate its log-in feature into their checkouts, Amazon's payment system would technically have more users than PayPal.
As part of the announcement earlier this month, Amazon touted Gogo, which provides in-flight Internet access, as the marquee partner. During a recent test with Gogo, Amazon let customers pay for their in-flight Wi-Fi with by logging in to their Amazon accounts. The test seemed to mimic PayPal's digital payment process, and Amazon said Gogo customers were "highly satisfied" with the service.
While Gogo has praised the service, the integration with other merchants will be Amazon's biggest challenge. It will have to convince the same merchants that it's driving out of business to carry the Amazon branding on their site. In exchange, merchants will get a ready made log-in system that already has millions of users willing to make purchases.
Amazon actually accomplished something similar in the real world. For several months,at their brick-and-mortar stores. They have since been pulled from the two retailers' stores but remain in 7-Elevens and other competitors' locations.
'All out war'
Amazon can't dawdle in this effort. Other large companies have rolled out services that could help them grab a slice of the .
"I think there's an all out war for identity and payments tied in," Salyer said.
Fortunately for Amazon, many of these players face some disadvantages. Google has its
Facebook, meanwhile, hasbut has had trouble getting them to fork over their credit card information. When Facebook rolled out its Facebook Gifts shopping and delivery service, users made it clear .
Apple is another clear front-runner. The iPhone maker has building iOS into an mobile commerce platform with features like Passbook and Airdrop. But so far, it doesn't seem interested in selling anything other than its own products, or media and apps on iTunes.and a strong brand. Consumers trust Apple and are willing to shell out money for its products. And, Apple's been slowly
An entrenched leader
And there's still PayPal. The company, which started in 1998 with the primary function of letting eBay users make transactions before it was acquired by eBay in 2002, has greatly expanded its mandate and established itself as the preeminent online payments company.
"For PayPal, it took them 13, 14 years to get where they are. Nobody else is close in this point in time," said payments analyst Richard Oglesby. "There's a number of providers that are trying and some of them have significant assets that could help, that PayPal didn't have 13 years ago. That could shorten the time frame."
Amazon also needs to improve its smartphone presence, an area that PayPal has already bulked up with acquisitions such as. PayPal has also , allowing customers to pay for goods and services ahead of time and pick them up at a physical store.
Amazon is, which may be help in this arena. Or it could expand the capabilities of its Amazon app, similar to what PayPal has done, to make mobile transactions a lot simpler to do.
If Amazon cracks the mobile puzzle, it could end up creating a digital wallet that consumers are comfortable using anywhere.
Given Amazon's track record, PayPal has every reason to be worried.