Is Amazon Planning To Go Head-to-Head With PayPal?
Posted by Eric Savitz
Amazon.com (AMZN) has been aggressively rolling out a variety of Web-based services, including on-demand computing power and data storage. Could the company’s next move be to go after eBay (EBAY) subsidiary PayPal’s dominant franchise on online payments?
Cantor Fitzgerald analyst Derek Brown asserts in a research note this afternoon that Amazon “may soon launch a PayPal-esque Payments service for use by consumers and merchants across the Web, potentially siphoning growth and/or profit from eBay’s crown jewel.” Brown says that Amazon could launch such a service as soon as late summer or early fall of this year.
“We believe an Amazon Payments solution for use across the Web holds real promise,” he writes. Brown contends that Amazon “long-ago demonstrated that it understands (perhaps better than any company) the needs/wants of online retailers.” And he also says the company understands - maybe better than any company - the needs and wants of online buyers. “Coupling this pool of knowledge with its massive customer base, powerful technology platform and unique skills sets, Amazon.com may be among the best-positioned Internet companies to attempt to challenge PayPal’s growing dominance.”
Brown says taking on PayPal successfully would be no sure thing, but adds that it seems “equally foolish” to simply disregard the idea as just another PayPal wannabe. He notes that the company already offers a site called Amazon Payments that allows users to send money to any U.S. mobile number of e-mail address using credit card info on file with Amazon.com to fund the transaction. He also notes that the company already also offer Amazon Flexible Payment Services, “a set of APIs that allows the movement of money between any two entities.”
Brown also notes that Amazon.com job listings show a number of openings in the area of external payments; he quotes one of the listings as saying “there is incredible opportunity to further leverage our payment services assets.”
Meanwhile, Brown also contends that eBay may be readying a further tweak to its business model, with an additional reduction in listing fees combined with a hike in back-end success fees. He says the result in the long run would likely be more listings. But that’s a mixed blessing: he says it would creation an “even greater strain” on the company’s searching and finding algorithms.
Concerned about both the potential competition from Amazon in payments, and the disruption from a shifting business model, Brown today repeated his Sell rating on eBay, with a price target of $25. Today, eBay is up 16 cents, or 0.6%, to $28.97 . Amazon is off $1.06, or 1.3%, to $81.91.
Posted by Eric Savitz
Amazon.com (AMZN) has been aggressively rolling out a variety of Web-based services, including on-demand computing power and data storage. Could the company’s next move be to go after eBay (EBAY) subsidiary PayPal’s dominant franchise on online payments?
Cantor Fitzgerald analyst Derek Brown asserts in a research note this afternoon that Amazon “may soon launch a PayPal-esque Payments service for use by consumers and merchants across the Web, potentially siphoning growth and/or profit from eBay’s crown jewel.” Brown says that Amazon could launch such a service as soon as late summer or early fall of this year.
“We believe an Amazon Payments solution for use across the Web holds real promise,” he writes. Brown contends that Amazon “long-ago demonstrated that it understands (perhaps better than any company) the needs/wants of online retailers.” And he also says the company understands - maybe better than any company - the needs and wants of online buyers. “Coupling this pool of knowledge with its massive customer base, powerful technology platform and unique skills sets, Amazon.com may be among the best-positioned Internet companies to attempt to challenge PayPal’s growing dominance.”
Brown says taking on PayPal successfully would be no sure thing, but adds that it seems “equally foolish” to simply disregard the idea as just another PayPal wannabe. He notes that the company already offers a site called Amazon Payments that allows users to send money to any U.S. mobile number of e-mail address using credit card info on file with Amazon.com to fund the transaction. He also notes that the company already also offer Amazon Flexible Payment Services, “a set of APIs that allows the movement of money between any two entities.”
Brown also notes that Amazon.com job listings show a number of openings in the area of external payments; he quotes one of the listings as saying “there is incredible opportunity to further leverage our payment services assets.”
Meanwhile, Brown also contends that eBay may be readying a further tweak to its business model, with an additional reduction in listing fees combined with a hike in back-end success fees. He says the result in the long run would likely be more listings. But that’s a mixed blessing: he says it would creation an “even greater strain” on the company’s searching and finding algorithms.
Concerned about both the potential competition from Amazon in payments, and the disruption from a shifting business model, Brown today repeated his Sell rating on eBay, with a price target of $25. Today, eBay is up 16 cents, or 0.6%, to $28.97 . Amazon is off $1.06, or 1.3%, to $81.91.
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