Bill Me Later, like other online payment services such as PayPal and Google's Checkout, makes money by charging merchant fees.
Amazon.com on Tuesday said it has agreed to offer Bill Me Later's non-credit card payment service as an option to shoppers. In addition, the online retailer said it will make an equity investment in its new partner.
Bill Me Later makes it possible for registered users of the service to defer payment on items without using their credit or debit cards. The service sends a bill to customers who can choose to pay in full without interest or fees, or go on a payment plan that would involve interest.
Bill Me Later, like other online payment services, such as PayPal and Google's Checkout, makes money by charging merchant fees. In Google's case, the company also sells ads.
The Amazon.com deal puts Bill Me Later in front of the retailer's tens of millions of customers. "Bill Me Later has developed a very customer-centric method to make online shopping even easier," Matt Swann, VP of payments at Amazon.com, said in a statement.
Terms of the investment in Bill Me Later weren't disclosed. Amazon.com said the transaction is expected to close in the first quarter of 2008.
Bill Me Later and other online payment services are offering special deals through merchants over the holiday shopping season to lure more customers. Bill Me Later is subsidizing shipping costs and offering deferred payments of up to 90 days with some merchant partners. To use the service, people must first register with the site, and then log in before shopping, choosing the Bill Me Later option at checkout time.
Credit and debit cards account for most of the $150 billion spent with online retailers, according to Javelin Strategy and Research. Online payment services are expected to account for 14% of the money spent online this year, rising to 30% by 2012.
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