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Amazon set to take on PayPal with new payments strategy

The e-retail giant plans to become the middleman between customers and companies that offer subscription-based payments, according to Reuters.


Amazon is planning to move in on PayPal's territory by becoming the middleman between customers and companies that offer subscription-based payment options, according to a new report.

The e-retail giant is expected to announce a new service on Monday that will see it become the middleman between paying bills and processing transactions for both small and large companies, according to Reuters. Speaking to the news outlet in an interview, Amazon vice president of seller services Tom Taylor said the effort is part of his company's plans to "expand where people might think about Amazon helping them."

The launch might be bad news for eBay-owned PayPal. Countless sites and companies around the Web allow customers to pay their bills with PayPal. Those transactions are made possible by consumers storing credit cards with PayPal and paying cash through the service. PayPal then takes a fee for the transaction.

Amazon is taking a nearly identical tack with its own payment service, according to Reuters. Customers who already have their credit cards stored on Amazon -- over 240 million at last count -- will find an Amazon payment button that can be used to make payments. The cash is debited from the credit cards Amazon has on file and the transaction is completed.

Amazon has been testing its payment service with a few startups, including mobile phone firm Ting. The main focus for the effort is subscription-based payment systems, though it could technically be applied to anything else. Like PayPal, Amazon collects a fee for each transaction.

In order for the payment system to get up and running, Amazon needs to partner with companies that will accept such transactions. It's not clear how many firms have so far signed on to the service.

Regardless, services like PayPal and Amazon's deliver some added security in an increasingly insecure world. By providing PayPal and Amazon payment buttons, otherwise unknown merchants can provide some security to customers who wouldn't want to share their credit cards with unknown firms.

CNET has contacted Amazon for comment. We will update this story when we have more information.