Amazon Introduces PayPhrase Payment Shortcut

Online merchants can use Amazon's passphrase payment scheme to ease the friction of online commerce.
Checkout By Amazon -- the Amazon payment service that works with PayPhrase -- costs the same as Google Checkout and PayPal for basic transactions, without volume discounts: 2.9% + $0.30 per transaction.

Elizabeth Robertson, director of payments research at Javelin Research, says PayPhrase offers a way to accelerate transactions and to keep payment information with a single source rather than multiple merchants.

Robertson believes the benefit to merchants of not having to worry about payment data security is worth more than the potential value of payment information as business intelligence.

"The net is it's more beneficial to not have the expense of PCI compliance and the risk of storing payment data," she said. "Ultimately, if a merchant like Amazon is facilitating payment transactions for multiple merchants, they in some way may have more information [than their partners] about payment purchase behavior, but that's also available through the payment network."

A typical use for data of this sort is monitoring for fraud.

Robertson says that although PayPal is in the best position in terms of market share and the diversity of its offerings, there's also something to be said for diversity of payment options.

"When merchants offer alternatives to standard cards, consumers are often interested in having those alternatives and it can increase sales," she said. "Merchants do benefit from offering alternatives. The question then is how many and who do I want to be associated with?"

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