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Amazon’s partnership program threatens PayPal

Amazon’s ambitious plans for Amazon Payments could make the retailer a real threat to online digital wallet providers.

Amazon chose the April 2016 Money20/20 event to announce the launch of the Amazon Payments Global Partner Program. Amazon intends to use this program to expand its Amazon Payments checkout service – currently available to individual merchants only – to a far larger range of online retailers via partnerships with payment processors and e-commerce platform providers. Amazon Payments currently operates similarly to a digital wallet, in that it allows consumers to access and use their stored payment card details at any online retailer that accepts Amazon.

Amazon can offer prospective partners a large user base – it currently has 285 million account holders, of which 23 million have already used their Amazon credentials to pay on other sites. The partnership program is likely to be successful from a merchant standpoint – especially given the perks Amazon is offering its partners, which include account management and co-marketing – but it still needs to be able to compete with other digital wallets as a consumer service.

Consumers trust the Amazon brand with their payment information and are familiar with logging in to Amazon to shop online, so it is not difficult to imagine them choosing to use a “Pay with Amazon” button at other online shops. However, the requirement of a password puts Amazon’s services a step behind PayPal, which has already rolled out a password-free option in One Touch.

By Samuel Murrant, Senior Consumer Payments Analyst

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