Amazon today is launching a subscription payments service as part of its latest push into the payments space.
Users who have credit card information stored on Amazon will be able to pay phone or TV bills, items which traditionally have not been eligible for credit card payment in many jurisdictions. They will charge a fee for each transaction.
They are seeking to capitalize on what appears to be wiggle room left behind by existing players, such as PayPal, in bringing down the costs of transferring value.
Amazon’s role as a third-party payment processor now accounts for 40% of its revenues. On June 18, it is expected that they will unveil a smartphone key for mobile payments.
Undoubtedly, Amazon is able to leverage its sheer size and transaction volume to decrease costs incurred and thereby pass on those savings to consumers.
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Amazon’s subscription payments service is targeted for smaller players and startups. Ting, a mobile company part of Tucows Inc, said that users of Amazon’s recurring payments spent 30% more on their website.
The service though is entering what may be turning into an increasingly crowded space for payment technologies. There is already Amazon Coin, which can be used for purchasing software from the Amazon Appstore.
Recently, some Bitcoin-related patent activity came to light. Concepts of Bitcoin and other digital currency were mentioned in the context of flexible funding schemes for maximizing the efficiency of cloud-based resources. This revived hopes of their full-fledged acceptance of Bitcoin after they were dashed in April.
Looking at what may very well be a convergence in payment technologies and a tightening spread between their associated costs, Roger Ver’s recent prediction that Amazon will accept Bitcoin by year’s end becomes even less plausible. The key to his argument was the high fees associated with credit card transactions. Assuming that Amazon is no Overstock or i-Pmart, they will have no interest in holding onto bitcoins, whose exchange will not be free either.
The pattern resembles that of a debate that broke out on reddit today regarding high currency exchange spreads in airports. Some were quick to recommend Bitcoin ATM’s as the savior. Others countered that it is entirely possible for the ATM’s to incur similar fees, especially in expensive venues like airports.