Image: Adobe Stock | Staredown

Amazon Pay Places is Challenging PayPal

For most of this year, it appeared that Amazon and PayPal might be heading toward a partnership.

We reported that PayPal started to sell Amazon gift cards on their gift card site. Additionally, we discussed rumors of talks between Amazon and PayPal to include PayPal as a payment option.

BUT AN EXPANSION OF AMAZON PAY MAY STOP ALL SUCH IDEAS

Launched in 2007, Amazon Payment solutions have been around for a good ten years under different names. Most notable was Checkout by Amazon (CBA) which was officially discontinued earlier this year. eCommerce adoption was spotty beyond the now defunct Amazon Webstore service.

Recently a second push under the Amazon Pay name received some love by larger eCommerce SaaS providers such as BigCommerce. The newly branded service also focused on mobile payment solutions that work better on smaller screens.

The company also offers Amazon Pay Express which it aimed at sites with few items that need a simple way to process transactions. Express uses a plain HTML script and is easy to implement immediately.

AMAZON STARTED A DIGITAL WALLET WITHOUT CALLING IT A WALLET

Over the last year, Amazon also began to find new ways to allow customers to maintain funds in their Amazon account.

While this was technically possible before using gift cards, the company simplified the process and even accepts cash and offers a discount on debit card fund transfers.

In simple terms it created a digital wallet with a fund balance, similar to what PayPal has offered for nearly all of its existence.

One of the main benefits of PayPal was its large user base who have PayPal funds in their accounts. Currently, PayPal holds about $15 billion in customer funds, averaging about $75 in funds per user.

Amazon’s user base is similar in size. However, previously Amazon users did not retain a lot of funds in their Amazon account. This has begun to change.

PayPal also went outside its original eCommerce box and worked on more P2P and mobile payment solutions at traditional brick and mortar retailers. In essence, some people use PayPal like a prepaid credit card or even a checking account.

AMAZON PAY PLACES GOING AFTER IN-STORE PAYMENT SOLUTIONS

Today, Amazon announced Amazon Pay Places. This new service is an extension of the Amazon Pay service and allows customers to use their Amazon account for in-store purchases.

Customers have access to all their stored payment methods in their Amazon account as well as funds from debit card or bank transfer and gift card and cash deposits.

Sound much like PayPal doesn’t it?

Image: Amazon | Amazon Pay Places TGI Friday's
Image: Amazon | Amazon Pay Places TGI Friday’s

RESTAURANTS THE FIRST WAVE?

The first public implementation is limited to the casual dining restaurant chain TGI Friday’s.

For this trial, and that is what it appears to be, participating locations are located in Boston, Philadelphia, Baltimore, Washington D.C., Richmond, Virginia, and Wilkes-Barre, Pennsylvania.

Amazon Pay Places is available through the Amazon mobile app under the “Programs &  Features” section.

One unique aspect about this new service is that TGI Friday’s menu displays in the Amazon app and you can order from it for take out.

Dine in or take out, payments are processed through the Amazon Pay app.

For restaurant implementation, this is a no-brainer. Restaurants can provide menu information, take orders and collect payment, all within one app.

What’s not to like about one dining app for eating out, It beats the current mess restaurant branded apps with different user experiences, offerings, and separate payment processing schemes.

So the dining segment is a brilliant place to start to bring as many different choices under one roof. Could there be a challenge to Open Table in the future?

RESTAURANTS ARE JUST THE BEGINNIG

Remember that Whole Foods acquisition? Just today we provided a glimpse of what that may look like through the eyes of an Alibaba produced video in one of their Hema Supermarket stores.

Looking at Amazon Pay Places possibilities, a similar Whole Foods shopping integration is easily envisioned and again a no-brainer.

There are so many other possibilities for Amazon to expand Amazon Pay Places beyond restaurants and Whole Foods. The company already is working with local contractors and service providers. All can become part of an Amazon Pay expansion.

ACCOUNT BALANCES COULD BE KEY TO WIDESPREAD ADOPTION

PayPal’s lead in user funds may erode quickly if Amazon can entice customers to store more “cash” balances on their platform. That would provide an automatic hook to Amazon customers to use that “cash on hand” to make purchases.

As we see it, a partnership with PayPal seems just a memory now. Amazon Pay Places will be a direct competitor to PayPal’s with an increased focus on funds storage and expansion into the brick and mortar world.

THE IMPACT ON SMALL ECOMMERCE SELLERS

Over time, smaller eCommerce retailers will also have to look at Amazon Pay again if the company can grow acceptance of Amazon Pay.

An already bewildering number of checkout and payment solutions just got a bit more confusing with a full featured Amazon Pay solution.

eCommerce sellers need to be part of any wallet program that allows storage of funds. And PayPal had a virtual monopoly on this one, but it seems Amazon is trying to break that.

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