December 31, 2007, 12:00 AM

Amazon throws its weight behind online payment option Bill Me Later

Amazon’s announcement that it will offer the Bill Me Later invoicing service as a payment option should strengthen Bill Me Later’s position in the growing alternative payments market.

E-retailers already know that when it comes to alternative online payments, eBay’s PayPal is not the only game in town. That’s something that should become clearer to more consumers with Amazon’s announcement that it will offer Bill Me Later as a payment option and also will take an undisclosed equity stake in the company.

The Bill Me Later service allows retailers to offer promotional financing such as 90 days same as cash. From the consumer perspective, it’s an option that opens up online shopping to those leery about supplying credit card information over the Internet because it allows them to purchase online without using a credit card and instead receive a bill.

The relationship with Amazon should strengthen Bill Me Later’s position in the alternative payments marketplace as well as push the general concept of alternative payments farther toward mainstream use, say industry-watchers. Ed Kountz, a Jupiter Research analyst, calls the deal “a testament to the increasing influence of online alternative payments.”

PayPal had launched a similar payment option of its own this summer, called Pay Later. Bill Me Later, however, live since 2002, is already fairly widespread among online retailers, which represent about 80% of the merchants that offer the service. In June, a report by brokerage firm Cowen and Trout said 56 of the Top 200 online retailers offer Bill Me Later. So far, about 30 merchants offer Pay Later, according to PayPal. Forrester analyst Sucharita Mulpuru notes that Amazon will not likely endorse Pay Later by offering it to Amazon customers.

Amazon has not reported when it will add Bill Me Later as a payment option on

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