While Amazon’s web services business AWS has emerged as a bright spot on the company’s thin-margined balance sheet, the company is always looking for new areas of growth.
One business that’s seen increasing focus and investment over the past year: Payments.
Amazon already has hundreds of millions of credit cards on file, so it can offer a service called Login and Pay that lets third-party retailers allow shoppers to use their Amazon payment and shipping information at check-out.
All you have to do is use your Amazon login, and all that payment info is carried through — very convenient when you’re visiting a new web site.
Last spring, payments exec Tom Taylor told Re/Code’s Jason Del Rey that Amazon CEO Jeff Bezos was lighting a fire under his team, pressuring them to “go faster” to ramp up its payments business.
So, how’s the business doing?
In typical Amazon fashion, execs are tight-lipped. The company’s new VP of external payments, Patrick Gauthier, tells Business Insider that he can’t give specific numbers, but says growth is in the “triple digits” (over 100%), meaning it’s more than doubling every year.
Third party data suggests Amazon’s making slow progress in the area.
In ChannelAdvisor’s annual retail survey, the company highlighted Amazon Payments as a growing consumer identity service — the only one making any progress in catching up to PayPal as the foremost non-credit card payments provider:
Similarly, a recent survey by customer identity management provider Gigya showed growth for both Amazon and PayPal, which now account for 10% of all ecommerce social logins. Amazon itself paid for an independent survey by PYMNTS that showed marked Amazon Payments as one of the most trusted new payments platforms:
That “new” is significant: PayPal isn’t included in that list because it’s been offering its payments services for a very long time. (Gauthier’s actually a PayPal alum. He managed its emerging retail services business for nearly 2.5 years before getting poached by Amazon in January.)
Amazon has also tried to use Login and Pay to make Prime, its $US99-per-year shopping club, more attractive to potential subscribers. The company launched a partnership with the shopping site AllSaints last fall that gives Prime members speedier shipping options when they use their Amazon credentials.
Although Gauthier mentioned the potenital for many more partnerships like this — with benefits ranging from expedited shipping to exclusive deals or product lines — the idea hasn’t taken off yet with retailers, as Amazon has no new deals to share at this time.
Why not? Although Amazon says that it doesn’t log customer data through Login and Pay (it can see total purchase price, but not individual items shoppers bought), ChannelAdvisor CEO Scot Wingo still pegs merchant hesitation on the wariness of increased competition.
“Top retailers are more open to [PayPal] because PayPal isn’t a merchant,” he tells Business Insider. “Some retailers still view Amazon as a competitor, so Amazon will have to get over that hurdle to grow its Login and Pay customer base.”
The company also offers a Square-like service called Local Register that lets small businesses use an Amazon-branded card reader; Gauthier says he’s seeing growth in that cateogory, though not as substaintially as with Login and Pay.
A side benefit: More engagement on Amazon.com
The obvious benefit of Login and Pay for Amazon is the ability to earn money even when people aren’t shopping on Amazon.com. Login and Pay customers must give Amazon 2.9% of any total transaction, plus a $US0.30 authorization fee that used to be refundable, but isn’t anymore.
But there’s another benefit that Gauthier says is actually more important. Gauthier and his team found that customers that transact with third-party merchants via Login and Pay also visited Amazon.com more often. That idea is at the core of how Amazon thinks about payments processing.
“A measure of success internally will be the engagement of Amazon customers,” Gauthier says. “We track how many of customers are also using Amazon on third-party sites, and we try to understand how that evolves their relationship with Amazon. And that is my primary North Star.”
Since Amazon broke out AWS into its revenue own category on its earnings, it’s become clear that while the potential is there, the money isn’t yet. Payments falls in the “Other” category, along with Amazon’s advertising business, which claimed only $US189 million of the company’s $US13.8 billion in North American sales last quarter.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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