Amazon Flexible Payment Service
Just as I'm catching up on Amazon's web services, they introduce another one - this time aimed at payment processing. My first impression though is pretty underwhelming. The one thing that FPS seems to have going for it is that it is extremely flexible. Most processing systems focus on moving a specific amount of money from a credit card to the sellers account. FPS provides options for combining micro-payments, direct debit (and proprietary Amazon funds) as well as recurring payments etc. In other words, FPS provides a ready made billing department rather than just an order processing system.
The trade off though is that FPS (at least at first glance) looks expensive. For example, Google checkout charges 2% + 20 cents per transaction regardless of value. Amazon charge 2.9% + 30 cents for credit card transactions (for amounts of $10). Amazon has much cheaper rates for direct debit and Amazon Payments, but credit cards are the main payment method over the web.
It's even worse for Amazon when you consider that Google is processing payments for free until 2008 and after that gives $10 of free transactions for ever $1 spent on AdWords. You'd definitely want to be taking advantage of the flexibility that Amazon provides.
I also can't see any benefit from using Amazon's services together so I'm not sure what prompted Scoble's comment:
Add this to Amazon’s existing S3 and EC2 services and this is significant.
There's no reason you'd pick Amazon's payment processing over Google checkout unless you really wanted to consolidate your monthly bills. It's still a good move for Amazon to keep externalizing the stuff they have to build for their store anyway, but they seem to be lacking a competitive edge in this case.
What am I missing?
August 3rd, 2007 at 7:08 pm
One company for all your APIs. Makes sense to me. Fewer relationships, fewer bills to pay, and more trust over time. But maybe there isn’t as good a tie as I thought on first gut. I need sleep.
August 3rd, 2007 at 7:27 pm
Fewer bills is good, but companies handle bills from multiple companies all the time so it’s not an advantage that’s worth very much. The only advantage is that if you’re using S3 and EC2 they’re likely to be available at the same time as the payment processing but that’s not something you could depend on so you’d still have to handle the error conditions anyway.
August 3rd, 2007 at 7:37 pm
Oh, and it’s not just you that thinks it’s a game changer - you posted an entry by Phil801 to your link list that called it a game changer too, but I really can’t see anything new about it. I must be missing something.
August 17th, 2007 at 12:32 am
You can debate endlessly the technology and the pricing, both of which are easy enough for Amazon to change or for someone other company to compete directly with. But that is missing the point, I think. As I wrote on http://www.freshbooks.com/blog/2007/08/03/amazon-flexible-payment-service/, the main advantage is marketing.
Web services have not caught on with the general public. Many deeply fear using their credit cards online. Since web services depend on online credit card payments to keep them afloat, this is a huge bottleneck to growth. So, now look at Amazon. They already have millions of existing customer relationships involving credit cards. With FPS, they are stepping in to handle the scariest part of online commerce. This will smooth the path between a potential customer and your bank account. And *that* is why it is significant. It will do a lot to open up the flood way of consumer capital into web services, and thus lead to a large amount of industry growth.