August 13, 2007

Amazon launches PayPal rival

by Jan Harris

Computers & Internet

Amazon has announced a limited beta version of an online payment system – the Amazon Flexible Payments Service (FPS) – on its web services blog.

Amazon FPS is designed for developers who are building online businesses, allowing them to more easily incorporate payment processing into their sites.

It provides “Amazon Payments” accounts and funds can also be transferred via credit cards and bank accounts.

Amazon Payments already allows vendors to collect payments if they are selling goods on Amazon.com.

The new payment system extends this to allow payment collection on third-party sites as well. Buyers can transfer funds via their existing Amazon accounts, so they don’t have to re-enter all their personal information on another site.

It isn’t known if eBay will allow the use of Amazon FPS alongside its own PayPal service, but as the online auction site currently bans the use of Google Checkout, it seems unlikely that it will open the door to Amazon.

eBay’s stance is that a payment service isn’t suitable unless it has a reliable track record of providing safe financial services.

There are no start-up fees or minimum charges for Amazon’s FP. Vendors are charged a percentage based on the transaction size and the payment method.

FPS also handles micro-payments, allowing vendors to collect payments as small as a single cent. For payments under five cents, Amazon charges 20 per cent of the transaction with a minimum fee of one quarter of one cent.

PayPal’s minimum fee is a five per cent cut plus an extra five cents. This effectively makes payments of less than a dollar untenable.

The beta version of Amazon FPS allows developers to test their applications without actually moving money. The sandbox allows errors in the payment process to be simulated to test the new application.

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