History always repeats itself and sometimes that's good. Here's a second chance to be part of it: tmdtc.com

Friday 3 August 2007

Amazon Flexible Payment Beta available

Amazon has started a limited beta of Flexible Payment System that they describe as "the first payments service designed from the ground up specifically for developers".

Features look interesting, and try to make micropayments possible (I remember having read somewhere that Amazon was seen as the only company that would be able to make micropayments viable due to the amount of credit card transfers they do monthly): for example you can aggregate several micro-payments in one transaction.

It also features easy billing of Amazon shoppers as the same credential can be used to log in Amazon and pay with FPS. FPS also uses the data stored in the shopper's account, so no need to ask credit card numbers.

It seems flexibility is key to their offer. Apparently it would be possible to build a market place where you aren't the paid entity. Their example is proposing mp3 downloads where the payment goes to the artist, with the market place getting a share of the transaction.

But what about the fees? Well, here's the situation for credit cards: For a payment higher than 10$, Amazon charge 2.9% + 0.30$, same as Paypal. But Paypal lowers the fee for transaction higher than 3000$. And Amazon changes the fee for payments lower than 10$:
5.0% + $0.05. Google checkout is free for the moment, but will charge 2%+0.20$ from january 2008.
When you compare these solutions, it becomes clear that Amazon is looking to grab market share in smaller payments: the smaller the payment, the cheaper they are compared to their competitors, the biggest the payment, le least competitive they are (except if you qualify for their volume discounts, which give you the same rates as Paypal):

Amount Amazon fee
Paypal fee
Google fee
1 0,1 0,33 0,22
5 0,3 0,45 0,3
11 0,62 0,62 0,42
3001 87,33 75,33 60,22

Now for the bad news: this beta service is reserved to developers having a credit card issued by an american bank.... As Google Checkout is only available to US and UK vendors, this leaves me with only Paypal as a viable solution. It's working fine for me in Myowndb and Profoss, but although the documentation is complete, using their development sandbox is time consuming, the forum is not great (just did a search that ended with a "ODBC Drivers error '80040e31'") and the lack of competition made them leave useful features unimplemented (eg reactivate a subscription that expired).

FPS is the latest Amazon webservice released. They started in 2002 and have built business on each of them, as Jeff describes.

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