April 1, 2014, 12:41 PM

Amazon Payments woos startup e-retailers with a free processing offer

The e-retailer’s technology division is offering new e-commerce companies that deploy Amazon login and payment tools on their web sites free payment processing for their first $10,000 in transactions over 12 months.

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Amazon.com Inc. has begun offering a  promotion for startup online retailers that encourages them to deploy  Login and Pay with Amazon technology on their web sites. That technology allows the 215 million consumers with Amazon accounts to pay by entering their Amazon user names and passwords. Companies that add the Amazon payment method are eligible to receive free payment processing for transactions made through Amazon Payments, up to $10,000 in one year, Amazon says.  

Amazon typically charges 2.9% plus $0.30 per transaction, for purchases of $10 or more, with volume discounts starting at $3,000 in transactions per month; for purchases of less than $10, it charges 5.0% + $0.05 per transaction.

For portfolio companies, such as new-business incubators that help several companies get off the ground, Amazon is offering free payment processing for the first $100,000 in transactions in one year. The promotion began March 4.

In order to receive the deal, businesses must also have an AWS Activate account, which is part of the retailer’s Amazon Web Services technology and services division. Signing up for an account is free; companies pay for any services they use, including web hosting and data storage.

“Startups are driving forward with a lot of great new things that customers are going to be looking for—things Amazon doesn’t provide today, but that a startup can offer,” Rich Koehler, director of product and marketing for Amazon Payments, tells Internet Retailer. Many of those services require customers to have an account with the business, such as in-flight wireless providers, he adds.  If the service offers Amazon Payments, a registered Amazon shopper could sign in with his Amazon credentials.

In part, Amazon’s promotion is meant to help reduce costs and technical burdens surrounding payments and customer account management for fledgling e-commerce companies, Koehler says. The No. 1 retailer in the Top 500 Guide will also help those businesses to grow by making it easy for Amazon customers to start transacting with a new online business, Koehler adds. “With Login and Pay, [a startup] is only two taps away from having a registered customer, and the customer is only one tap away from making a purchase,” he says. Amazon does not have any cross-promotional marketing planned to push its customers to businesses offering Amazon Login and Pay, though that isn’t ruled out, he says.

Amazon declines to reveal the exact number of e-commerce businesses using its payments technology on their web sites, but Koehler says they number in the thousands. Five retailers in the 2013 Top 500  and 12 in the Second 500 report offering Amazon payments technology on their e-commerce sites.

Canada-based home furnishings e-retailer Cymax Stores Inc., No. 197, has been using the technology since before the promotion began. After deploying it, conversions went up by 3.15%, says director of corporate development Lar Quigley.

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