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Why Amazon Won’t Partner With PayPal

When PayPal went public again in the middle of 2015, it was entering into a much different marketplace than the one it saw when it was first listed on the Nasdaq in 2002. The big change – parent company eBay had been surpassed in the internet marketplace my online retailer megalith Amazon. So when the time came for PayPal to re-enter the public market, many of its 169 million users were hoping that they might soon be able to pay for their Prime purchases with a simple PayPal click. Amazon has swiftly shut down that notion.

 

In House Technology

 

Here’s the thing about Amazon. If it pertains to the business model and it can be done, they’re going to take a whack at it. Google Chromecast, while still available through Amazon’s online marketplace, was met with Amazon TV. Netflix was met with Amazon Prime. They’ve even got their own smarthome hub.

 

So it should come as no surprise that partnership with PayPal was pushed aside in favor of an Amazon exclusive technology, Pay With Amazon. The product launched in 2013 and has already managed to rack up some 23 million users. It’s a pretty straightforward interface. Users log in and are able to use stored payment information to make quick purchases without having to re-enter the same info repeatedly. Essentially, it does what PayPal does.

 

As the product has grown, Amazon has pushed it out more and more to greater acceptance with third party online retailers. It’s a logical move for Amazon insofar as they have some 294 million customer accounts internationally. While only a small fraction of them are using Pay With Amazon right now, shrewd marketing and sheer numbers means that their internal product has the potential to overgrow PayPal in the coming years. Their strategy to push for greater usage and acceptance of their platform has been kept relatively quiet up to this point, though, so that potential is still only speculatory.

 

PayPal’s Thoughts

 

As for what the newly public PayPal’s thoughts on the matter, they seem pretty ok with not roping in the retailer. Morgan Stanley analysts suspect that the online payment manager is eyeing its own big fish, Chinese e-commerce company Alibaba.

 

Unlike Amazon, the Alibaba marketplace does not have a direct method of one-click payment, and while PayPal is strong in the US, it has its sights on gaining more independent acceptance internationally.

 

A partnership with Alibaba would allow PayPal to get in good oversees before Apple and Google’s mobile wallet systems become too culturally ingrained, giving them a competitive edge with this new form of mobile money management.

 

In fact, PayPal and Alibaba already have a limited partnership, and it’s increasingly growing. More of the e-commerce giant’s sites are being allowed to accept PayPal as payment than ever before. Now the big question is will PayPal supplant Alibaba’s own attempt at a native payment system – Alipay? The company hasn’t given up on its system yet, but it’s certainly starting to turn to PayPal an increasing amount as each of the companies grows.

Posted in Business.