Amazon is outsourcing more of its Web-scale software. Yesterday, it beefed up its payment services with the launch of Checkout by Amazon and Amazon Simple Pay. Other e-commerce sites can basically insert an Amazon Checkout cart on their sites and Amazon’s software will handle one-click ordering for anyone with an existing amazon account, order management, shipping and sales tax calculations, and other features. Or with Amazon Simple Pay, customers can just remotely sign into their Amazon accounts and Amazon will handle the payment process itself.
For both services, Amazon charges a transaction fee that starts at 2.9 percent of the order amount, plus 30 cents per order (it goes down to 1.9 percent for sites doing more than $100,000 a month in sales). And for transactions less than $10, Amazon charges 5 percent plus 5 cents.
Amazon already offers an array of payment services for both consumers and businesses, including a Flexible Payments Web service for developers to build their own checkout experiences for themselves. Hints of these latest additions came out in June. Checkout and Simple Pay are aimed squarely at businesses who may not have the resources or time to build their own payment service using Amazon’s Flexible Payment Services API. Amazon is going after PayPal and Google Checkout by leveraging its own payment software (and the millions of existing accounts tied to its system) and making it available to others.
Amazon is making big strides towards building cloud computing services, from payments to storage to compute cycles. If it can succeed in creating meaningful revenues from these services, they should be higher-margin businesses than shipping books and CDs. (In a related move today, Amazon is simplifying its Mechanical Turk Web service so that non-coders (i.e., business managers) can set up tasks they want to automatically farm out to digital workers across the world.