Amazon Box

Amazon is Stepping into PayPal Territory of Middleman Between Seller and Customer

June 9, 2014 - Written By Cory McNutt

In this rapidly growing field of e-commerce, sellers must ask for customer’s credit card information to complete the transaction. With the number of hackers out there and cybercrime of the rise, many customers are afraid, and rightly so, to give out their credit card information to many of the small companies that do online business. It is a real catch 22 – the internet makes it possible for a small company to sell their products all over the world, but customers are leary of doling out their private information, and without their potential customer’s information, no sale is possible.  This is where eBay’s PayPal comes in – as a customer, we are okay with PayPal holding our credit card information and acting as a middleman. PayPal actually makes the payment for us without divulging our private information to the seller…other than what we give them as we go through their ‘check-out.’

This is the area that Amazon is headed to by expanding their role as a middleman – making payments on our behalf for our purchases and charging a small fee to do so…a fee that most people or vendors will gladly pay in order to help secure their transaction. The service will begin on Monday and allow its more than 240 million customers to use their credit card information stored at Amazon to make third-party purchases – which account for 40-percent of their sales. Amazon has connections to a vast number of smaller companies trying to sell their products through Amazon and this should surely help their cause to grow their sales and customer base.

This announcement is just another way to expand Amazon’s services, and ties in nicely with their June 18 unveiling of their new Amazon smartphone that should help them expand in the area of mobile payments.  Tom Taylor, Amazon vice president of seller services said in an interview:  “You should see it as one of many things that we’ll do to expand where people might think about Amazon helping them.”

Many small vendors were leary of Amazon, known for grabbing business in new areas, of having access to the details of the merchandise sold, but Taylor said that Amazon is collecting nothing but the dollar amount of each transaction, not the “item-level information.” Amazon has been testing this procedure for months now, and a small startup mobile phone company, Ting, said that customers spending has increased 30-percent once customers could use Amazon for their recurring payments. And in return, Amazon is hoping that more companies will become partners with them, knowing that Amazon will handle their payments and stand behind the product. It could be a great win-win situation for the small companies and Amazon as they both try and grow their sales.