Amazon calls its Amazon Pay a "checkout solution." Launched in 2007, it boasts revenues of about $300 million. But this doesn't necessarily mean that it's the perfect answer for you or your small business. It comes with some pros and cons depending on what you're looking for in a checkout service and your needs.
What Is Amazon Pay?
Amazon Pay provides easy, no-fuss financing options for customers when they purchase from your online store or website. They can click on a single, dedicated link when they're checking out and this will provide you with their customer info that's necessary to complete the transaction, information that's already stored in their Amazon account.
This includes their shipping and credit/debit card data, so they don't have to go through the fuss and bother of entering all those numbers and risk typos – something that has been known to steer shoppers to other, easier sites. You can even add coupons and special sales.
Amazon Pay processes these disbursements daily. It accepts Mastercard, Visa, Discover, American Express and Eurocard credit cards, as well as STAR, JCB and NYCE debit cards. It's up to you if you want to accept debit cards.
Consider also: What Is Apple Wallet?
You're required to keep a credit card on file with Amazon Pay, but it should only be charged if your transactions for the day somehow result in a negative balance to your Amazon Pay account.
How Much Does It Cost?
Fees are per purchase, and they're two-pronged. They include a transaction fee and an authorization fee, plus tax where applicable. The transaction fee is 2.9 percent of the purchase amount, and the authorization fee is 30 cents. You're charged when a sale is authorized and processed. A cross-border rate applies instead of the usual transaction fee if a customer uses a card that's issued outside the U.S. It's 3.9 percent when a customer makes their purchase online or via mobile device, but it increases to 5 percent if they use Alexa.
As for those daily disbursements of your sales proceeds, Amazon indicates that it will hold some of your funds as a reserve under some circumstances. You're required to keep a credit card on file with Amazon Pay, but it should only be charged if your transactions for the day somehow result in a negative balance to your Amazon Pay account.
Amazon will reimburse you for the transaction fee if your sale results in a refund to a customer, but it will keep that 30-cent authorization fee. There's no membership fee, and you can close your Amazon Pay account without charge if you find that it's just not working for you.
Amazon Pay’s Premiere Partners
Amazon Pay partners with a few websites if you freelance with one of them or your store is set up on one. They include Shopify, BigCommerce and Magento. BigCommerce will even give you four months for free if you use Amazon Pay for payment. But you have to set up an Amazon Seller account to take advantage of this option, and you must meet a few minor criteria to do this.
Consider also: Is Shopify a Good Choice for Your Online Store?
Amazon Pay Pros and Cons
Why do it? Offering Amazon Pay should certainly make your customers happy. You're providing them with an easy, efficient and secure way to do business with you, using a household name that they already know and trust.
Fraud protection is part of the deal with Amazon's A-to-Z Guarantee Policy for Merchants. It includes charge-back controls and fraud detection at no extra charge.
A reason why not do it is that the money from a sale won't hit your bank account for three to five business days, even though sales disbursements are processed daily. And this assumes that you've been using Amazon Pay for a while. You'll have to wait 14 days to collect payment on your first transaction.
Accepted payment methods on Amazon Pay include American Express, Visa and Mastercard gift cards, but your customers can't use their Amazon gift cards with Amazon Pay. And, of course, customers must have an existing Amazon account that has all types of payment methods on file, or they must create one.
Consider also: Is Amazon Pay the Card for You?