Online merchants can use Amazon's passphrase payment scheme to ease the friction of online commerce.

Thomas Claburn, Editor at Large, Enterprise Mobility

October 29, 2009

3 Min Read

In an effort to simplify e-commerce and increase the appeal of its online payment platform to merchants, Amazon Payments, a subsidiary of, on Thursday announced the availability of PayPhrase, a way for online shoppers to authorize purchases without entering a username and password.

PayPhrase lets online shoppers complete the online checkout process using their Amazon preferred payment and shipping settings without sharing payment information across multiple Web sites.

"PayPhrase solves the headache of trying to keep track of all the different usernames and passwords people use to shop on various sites across the Web," said Amazon PayPhrase general manger Matt Williams in a statement. "With PayPhrase, all you need is one phrase and one PIN to pay online."

Using a customized phrase, such as "Stop Me Before I Shop Again" or "Get Ready For My Customer Support Call," consumers at or at other Web sites that accept PayPhrase can quickly preview purchases and authorize them with a four-digit PIN.

PayPhrase is less fun than it might be due to Amazon's content restrictions.

PayPhrases can't use trademarked terms. Nor can they use language that is "unlawful, libelous, defamatory, obscene, pornographic, indecent, lewd, harassing, threatening, harmful, invasive of privacy or publicity rights, abusive, inflammatory, or otherwise objectionable..."

A PayPhrase must be at least two words, at least four characters, and cannot exceed 100 characters. No special characters or numbers are allowed.

PayPhrase also cannot be used to purchase digital goods, like MP3 downloads.

Nonetheless, PayPhrase should find enthusiastic use among parents with dependents who need to shop online: PayPhrases and PINs can be shared with family members (or anyone for that matter), enabling them to make online purchases that are subject to a pre-set spending limit and an optional approval process.

Amazon Payments competes with PayPal, Google Checkout, and bank payment platforms. Merchants planning to offer PayPhrase include DKNY, Jockey, Patagonia,, J&R Electronics, and Car Toys.

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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About the Author(s)

Thomas Claburn

Editor at Large, Enterprise Mobility

Thomas Claburn has been writing about business and technology since 1996, for publications such as New Architect, PC Computing, InformationWeek, Salon, Wired, and Ziff Davis Smart Business. Before that, he worked in film and television, having earned a not particularly useful master's degree in film production. He wrote the original treatment for 3DO's Killing Time, a short story that appeared in On Spec, and the screenplay for an independent film called The Hanged Man, which he would later direct. He's the author of a science fiction novel, Reflecting Fires, and a sadly neglected blog, Lot 49. His iPhone game, Blocfall, is available through the iTunes App Store. His wife is a talented jazz singer; he does not sing, which is for the best.

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