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The New Battle in the Online Payment Sphere: Amazon vs PayPal

Amazon has launched a service called Login and Pay with Amazon which allows partner sites to enable a Pay with Amazon payment button that can process purchases through the Amazon system. This competes directly with PayPal and merchant services and could become a serious competitor for eBay’s payment processing giant. It’s also something that could give Amazon a third income arm to augment the warehousing sales and cloud services it has built its business on.

The new Login and Pay with Amazon combines the current Amazon payments services with a new login service similar to Google or Twitter login systems for websites. Together, the combined services offer a one-stop integration for Web payments in a way similar to how PayPal’s payments button works.

This will allow Amazon’s business partners to tap into the 215 million active customer accounts that the company has on tap. According to Tom Taylor, Vice President, Amazon Payments, ‘Login and Pay with Amazon enables companies to make millions of our customers their customers by inviting online shoppers with Amazon credentials to access their account information safely and securely with a single login.’

Until now, Amazon payments services have directed users to Amazon’s website to authorize the purchase – if you’ve invested in Kickstarter projects, you’ve no doubt seen this in action. This new setup works the same way, but doesn’t require the site redirect and can work in a window or directly on the merchant’s site.

On top of the payments option, this new login service also means that websites can accept Amazon credentials as a login, in the same way they use Facebook, Twitter or Google login authentication. This opens up possibilities for a whole cottage industry of services working in and around Amazon’s consumer offerings like streaming video, audio, etc. Since it works through a simple oAuth implementation, developers will have no difficulty adding it to a site. Amazon’s inclusion of their A to Z Guarantee for this authentication service will only bolster consumer confidence.

For those who travel, you’ll see the new Login and Pay with Amazon in action when you use Gogo WiFi in flight on an air flight later this year – the company plans to have it implemented before the big holiday season of flying begins next month.

For its part, PayPal is not sitting on its laurels waiting to be ousted from the market. The company recently acquired BrainTree, a cross-site payments solution, and has unveiled a physical payment option that can be used in brick-and-mortar retail establishments to pay for goods and services. This would allow small businesses to accept payments via PayPal by having their phone or register bill the client or the client can pay and their phone will produce a QR code that the clerk at the register can scan to complete the transaction. A random four-number code can also be produced which can then be entered into the keypad of the credit card reader at the register to complete the sale.

Still, with Amazon now horning in on their core business, PayPal must be worried. Amazon, meanwhile, is poised to take yet another big chunk of the Web’s profit potential and add it to their portfolio.