Amazon launched another web service on Friday, called the Amazon Flexible Payments Service (FPS). The interesting thing about the launch is that Jeff Barr was teasing everyone on Twitter, building up the anticipation. I was eagerly watching for updates! I wish more product launches happened in a similar fashion.
Anyway, here is how Jeff described FPS:
We’ve taken all that we know about dealing with credit cards, bank accounts, fraud checking and customer service and wrapped it all up into one convenient package.
In much the same way that S3 and EC2 allow developers to forget about leasing space in data centers, buying servers and negotiating for bandwidth, FPS shields developers from many of the messy and complex issues which arise when dealing with money. Once again, we take care of the “muck” and developers get to focus on being innovative and creative.
As you know, I love S3. It shouldn’t be much of a surprise then when I say that FPS gets me really, really excited. I haven’t looked at it too closely, but even a quick glance suggests that FPS is amazing. PayPal is the giant of the payments space, but they badly need some competition. Unfortunately, no one seems prepared to provide it. No, not even FPS.
The problem is geography. There’s competition for US merchants, but everyone else is left out in the cold. Just like Google Checkout, FPS has launched with support limited to companies in the US (though buyers can be anywhere…and Google has since added UK merchant support but that’s it). There are certainly a lot of Internet users in the United States, but they still make up less than a quarter of the world total, and that percentage drops every day. There is a ton of e-commerce taking place outside the US.
PayPal is supported in over 190 countries and regions. There are 14 countries that PayPal describes as “localized” and another 21 that support withdrawals to local bank accounts. For merchants in 34 of these countries (ignoring the US), Google Checkout and Amazon FPS simply are not options. PayPal is the only viable choice.
And don’t get me wrong, I quite like PayPal, but there are definitely things that need to be improved. The FPS feature set addresses a wide range of these issues (such as support for micro-payments). But Amazon FPS and Google Checkout will simply not beat PayPal until they are supported just as widely around the world. Maybe they don’t want to take on PayPal, you say? Bullshit, I reply. PayPal is the target, even if Amazon and Google will only admit that behind closed doors.
I would suggest there are only five companies that could build a payment system to rival PayPal. The first two are eBay and Amazon, the giants of e-commerce. eBay owns PayPal, and Amazon now has FPS. The other three are the usual suspects: Google, Yahoo, and Microsoft. Google has Checkout, and Yahoo seems to be fine with PayPal. That leaves Microsoft. A small part of me is hopeful for a wicked payments service as part of Windows Live Core, but Microsoft’s track record with launching worldwide services isn’t so great either.
Will there ever be a viable, worldwide competitor to PayPal? I hope so, but I’m not holding my breath.
Read: Amazon FPS