PayPal, Amazon Introduce New Payment Options

  Two alternative payment methods are being introduced for online commerce.
  EBay Inc.'s PayPal unit is working with GE Money Bank to offer a credit-financing service to attract new users and to help boost its participating merchants' operations.
  The PayPal service, called PayPal Pay Later, will allow merchants to offer a credit account with financing options such as no payments for 90 days to consumers, even those who do not have a PayPal account. PayPal is rolling out the service now to help spur merchant adoption before the holiday season, when many merchants are reluctant to add new payment options, says PayPal spokesperson Amanda Pires.
  She notes that PayPal research found that customers make the decision to spend 50% to 250% more when they have a deferred-payment option. Also, deferred-payment options increase spending by, according to PayPal's research.
  Merchants can add Pay Later to their existing payment systems without having to add a new system, says Pires.
  The move is a sign "PayPal is becoming as much of a household name as Visa or MasterCard," says Aite Group senior analyst Nick Holland. Although companies such as Bill Me Later already are present in the space, PayPal's "clout" makes it a "serious force in the market," says Holland, noting that he expects PayPal to "make a killing on this."
  Aite analyst Adil Moussa wonders how Bill Me Late will respond to the encroachment into its deferred online-payment niche. "Bill Me Later must start finding new value to offer to its merchants" to compete with the better-known PayPal brand.
  Bill Me Later says its strategy remains to continue growing its program and to expand into the person-to-person payments space.
  Meanwhile, Amazon Web Services, which handles Amazon.com's technology platform, is beta testing its Flexible Payments Service, a potential competitor to PayPal Inc. and Google Checkout. Amazon's service allows Web-site developers to access Amazon's application-programming interface, allowing other sites' developers to install the service on their Web sites. The interface displays Amazon's processing rates for the different payment options: credit cards, automated clearinghouse debits and Amazon Payments balance transfers, which are funds transfers between one Amazon Payments account and another account.
  Pricing fees are assessed on a per-transaction basis and vary depending on payment method and transaction amount. For example, the credit card fee for transactions greater than $10 is 2.9% of the sale plus 30 cents, while the ACH fee is 2% plus 5 cents.
  "By exposing different fees for each of these three methods, we can pass on savings from bank-account debits and balance transfers, allowing developers to save money," says an Amazon spokesperson.
  Amazon's Flexible Payments Service also allows users to aggregate micropayments into a single large transaction. When batching the micropayments into a single transaction, users can charge customers before or after the service is provided, making the transactions either prepaid or postpaid.
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