Amazon Pay Review (Formerly Amazon Payments)

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Pros

• No early termination fee
• Added convenience
• Brand recognition
• Easy to use

Cons

• Expensive for high-volume merchants
• Reports of withheld funds

Overview

Launched in 2007, Amazon Pay is a subsidiary of mammoth online retailer Amazon.com. The service allows customers to complete purchases, make donations, and set up recurring payments on a merchant’s website by making payments through their Amazon.com account. Unlike with PayPal (read our review), Amazon’s payment processing is conducted inline. In other words, a customer won’t have to leave your website in order to complete a payment. Amazon Pay integrates with 29 eCommerce providers, including Magento and Shopify (read our review).

Amazon Pay is a transparent and convenient service, and Amazon Pay’s quality shows in its client list. Big-name retailers using Amazon Pay, include Lenovo, Canon, and Purple.

Amazon Pay (formerly called Amazon Payments and Pay with Amazon) replaces older services Checkout by Amazon (for online sellers of tangible, physical goods) and Amazon Simple Pay (for digital goods such as e-books or software). Amazon Local Register, a mobile payment option that used a smartphone/tablet app and a plug-in card reader similar to Square, has also been discontinued with no replacement option being offered.

We are happy to see that Amazon Pay is easy to implement and has mostly positive reviews. When a customer completes a transaction at your store using Amazon Pay, they’ll be able to access Amazon’s popular A-to-z Guarantee. Also, customers can save time by using shipping and billing information already on file in their Amazon account when making purchases in your store, and they won’t be redirected to another site to complete the transaction. For all these reasons, plus the fair and transparent pricing, we’re happy to give Amazon Pay a perfect 5-star rating. That said, there are some downsides to the service: Customers must have already made a purchase through Amazon in the past or be willing to open a new account in order to complete transactions using the service. Plus, many online shoppers still prefer to use PayPal, which remains the industry leader in third-party processors. Still, if you sell online, Amazon Pay should definitely make your short list and it’s a strong contender.

Read on for our full review.

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Products & Services

Rating: Excellent

A quick note: Amazon Pay is currently available to merchants in the U.S., Japan, and the EU. In order to use Amazon Pay, you must have an established physical presence in the country in which you are processing transactions. More specifically, you must have a street address, a bank account, a credit card associated with your street address, and a phone number based in your country of operation.

Amazon Pay offers most of the features that you would expect from a payment service provider. Features and highlights include:

• Inline checkout: Customers can enter payment information and complete purchases without having to leave your website. This is convenient for the customer and also increases the likelihood of completing a sale.
• Automatic payments: Amazon Pay supports recurring payments and automatically renewing subscriptions.
• Fraud protection technology: This free service is the same technology used by Amazon.com to protect accounts from fraudulent transactions, lowering your costs and protecting your business. In addition, Amazon Pay grants merchants a Payment Protection Policy (spelled out in the Customer Agreement), which states that merchants may waive chargeback fees for qualifying fraudulent transactions.
• Voice Solutions: Allow customers to make purchases or donations through their Alexa devices. Create an Alexa Skill and add Amazon Pay to the skill to enable voice purchasing. See the Fees & Rates section below to view pricing for voice-enabled payments.
• Charitable Donations: Collect donations through Amazon Pay. View discounted rates for charitable organizations in the Fees & Rates section.
• Multiple Integration Options: Amazon Pay provides many ways of integrating Amazon Pay with your selling platform. These integrations range from plug-and-play options that are built into popular eCommerce software to custom solutions that fit the needs of enterprise businesses. You have the freedom to choose the integration that best fits your businesses and technological know-how.
• Amazon Seller Central: Every merchant using Amazon Pay will have access to Amazon’s dashboard, Seller Central. In Seller Central you’ll be able to manage chargeback claims, view reports, and more. Take a look at a screenshot of Seller Central below:

Amazon Pay combines and replaces several older services which have since been discontinued.

• Amazon Payments / Pay with Amazon: These are old names for Amazon Pay. They are essentially the same service with identical rates and features.
• Checkout by Amazon: This was the old service that was used to sell both physical and digital products online. It has been replaced by Amazon Pay. While both services offer the same basic features, Amazon Pay features an improved, more streamlined integration with merchant websites.
• Amazon Simple Pay: This service allowed merchants to sell digital products (i.e., video games or e-books) or collect donations. It offered the same features as Checkout by Amazon but didn’t support the sale of tangible, physical goods. Amazon Simple Pay was retired on June 1, 2015, with existing account holders being migrated over to Amazon Pay.
• Amazon Local Register: This service used a smartphone app and plug-in swiper to allow payments using a smartphone or tablet. Despite its apparent popularity, Amazon Pay stopped accepting new customers on October 30, 2015. The service was completely shut down on February 1, 2016. While Amazon has not offered a replacement service, Square (read our review) is an obvious alternative for merchants who need this capability.

Fees & Rates

Rating: Excellent

Like PayPal and most other eCommerce-focused processors, Amazon Pay utilizes a flat-rate pricing structure. Simple and easy to understand, Amazon’s pricing schedule is disclosed in detail on their website. Price is based on transaction type and location of the buyer. Take a look at the three categories below: Purchases made online, purchases made through Alexa (voice activated), and donations made to charitable organizations.

Web & Mobile

• 2.9% processing fee + $0.30 authorization fee per transaction (for domestic US transactions)
• 3.9% processing fee + $0.30 authorization fee per transaction (for cross-border transactions)

Alexa Voice-Activated Purchases (Real-World Goods & Services)

• 4.0% processing fee + $0.30 authorization fee per transaction (for domestic US transactions)
• 5.0% processing fee + $0.30 authorization fee per transaction (for cross-border transactions)

Charitable Organizations

• 2.2% processing fee + $0.30 authorization fee per transaction (for domestic US transactions)
• 3.2% processing fee + $0.30 authorization fee per transaction (for cross-border transactions)

That’s it. Unlike many traditional credit card processors, Amazon won’t charge you any account setup fees, monthly fees, PCI compliance fees – or any other fees, for that matter. There are no contracts to sign, and therefore, no early termination fees. Amazon Pay just charges fees on the transactions you process, so you only pay when you use the service.

Processing fees are based on a fixed percentage of each transaction amount (that’s the total cost of items, plus shipping and tax) and the authorization fee. Note that when you first start using Amazon Pay, you will have to wait a bit longer than normal to receive your funds. Amazon uses a reserve system, so when you first begin processing payments, all initial transactions will be held in Amazon’s reserve for 14 days . After that point, Amazon holds funds for seven days, and there is disbursement scheduled for every day (e.g., on your 17th day selling, you will receive payment for purchases made on your 9th day selling). In the event of a chargeback, you’ll pay a $20 disputed transaction fee plus tax. Overall, these rates are very similar to what competitors like PayPal and 2Checkout will charge you.

An important note: Your bank account must be associated with your Seller Central account in order receive funds from Amazon Pay.

Contract Length & Early Termination Fee

Rating: Excellent

Amazon allows you to use the Amazon Pay service without committing to a long-term contract. Use of the service is essentially month-to-month, but without any recurring monthly or annual fees, there’s little reason to cancel your account.

If you want to cancel anyway, Amazon provides a link you can use to contact a Seller Support representative, who will close the account for you. There’s also no early termination fee whatsoever. Unlike other processors who require at least 30 days’ written notice of account closure to avoid being billed for an additional month, you can close your account at any time, with no penalty.

Sales & Advertising Transparency

Rating: Excellent

Amazon is so well-established that it doesn’t need to rely on traditional sales or marketing campaigns to reach users. With payment information stored for more than 300 million individuals living around the globe, it’s easy for the internet giant to spread the word about services through its site, via referral, or word-of-mouth. There are no hidden fees associated with Amazon Pay. As long as you take the time to read the FAQs on their website, you should have a good grasp of how the service works.

Amazon Pay also has a respectable presence on social media, with active accounts on Facebook and Twitter. Additionally, they maintain a blog and have a YouTube channel that features numerous tutorials and testimonials from merchants.

Customer Service & Support

Rating: Good

Amazon Pay offers businesses several different ways to educate themselves about the service or to get in touch if problems or questions come up. Available resources include the following:

Resources On The Amazon Pay Website

• A comprehensive Support section, with numerous topics for customers, merchants, and developers.
• A Merchant Tools page, with payment buttons for integrating Amazon Pay with your seller website. This page also has a useful Marketing Guide.
• A Documentation page featuring Integration Guides, SDKs, and other resources to help you get set up.
• The Amazon Services Seller Forum has an Amazon Pay category featuring numerous discussions about common points of confusion.

Customer Support Options

• For merchants using Amazon Pay, customer support is available via email, telephone, and live chat. However, you have to have already signed up for the service to use these options. Therefore, we weren’t able to check in and see how easy or difficult it is to reach a customer support representative. I can say, however, that my experiences with sales and marketing representatives were all positive and timely. Service reps are available every day from 5 AM until 9 PM PST.

User Reviews

Rating: Excellent

Negative Reviews & Complaints

Amazon Pay doesn’t have a separate business profile with the BBB, and few, if any, of the 12,000+ complaints on the Amazon.com profile have anything to do with the service. Ripoff Report currently lists 31 complaints that are specific to Amazon Pay. Again, however, few of those complaints are from merchants. Instead, most of them are actually filed against people trying to use the service for illegal or scam sales.

While there aren’t a lot of complaints about Amazon Pay out there, we did find a few issues that were common enough to be notable, including the following:

• Withholding Funds and Freezing Accounts: Users have reported Amazon for holding funds for 90 days or longer and freezing accounts without prior notice. This is a very common complaint we see with third-party processors in general, and while we don’t want to disregard it, the issue is genuinely unavoidable side effect of the third-party payments business model.
• Initial Hold: As mentioned above, Amazon’s reserve policy states that funds are held for an observation period of 14 days for new accounts, causing an initial delay in payment. After that, funds are disbursed on a seven-day cycle.
• More Expensive Than Some Options: Because Amazon Pay charges flat-rate fees, merchants who operate mid to high-volume businesses may find that the cost of using Amazon Pay is higher than using other options (like a merchant account based on a subscription model, such as Fattmerchant). However, keep in mind that Amazon Pay is on par with other third-party processors, and at low volumes the flat-rate, pay-as-you-go processing tends to be most favorable for merchants.  Higher volume businesses (above $10k/month in card volume) will definitely see savings with a merchant account.
• Sign-Up Takes Too Long: A few merchants voiced frustration at the sign-up and set-up process with Amazon Pay. They say there are too many steps involved and that the process could use some streamlining.

Positive Reviews & Testimonials

In addition to case studies on the Amazon Pay site, there are several reports online from users who are satisfied with the payment processor. A thorough search found the following common positive attributes:

• Quick Payment Process: Since shipping and billing info is on file with Amazon, customers can complete orders lickety-split. This will hopefully increase your store’s conversion rate.
• Easy to Use: Merchants like that Amazon Pay is easy to add to their websites and that it’s easy for their customers to use.
• Name familiarity: Customers know and trust Amazon, and many customers have an Amazon account already set up. This name recognition helps your customers feel more secure about purchasing from your site.

Integrations & Add-Ons

In order to complete a purchase using Amazon Pay, customers will need to already have or be willing to sign up for an Amazon Pay account. All major credit cards can be used in Amazon’s system.

Amazon offers pre-built integrations with 29 shopping carts, including leading shopping cart provider Shopify (one of our favorites). Amazon Pay also offers many other ways to integrate the payment service with a merchant’s website including buttons and hosted checkout options. Look into Amazon Pay’s documentation for more information on integration options.

Final Verdict

If you’re already a seller with Amazon, using Amazon Pay as a third-party processor for your eCommerce site is a no-brainer. At the same time, Amazon Pay also offers significant advantages for sellers and organizations not currently affiliated with the company. You’ll be able to manage transactions, view reports, contact support and more in Amazon’s Seller Central. You’ll also be guarded against fraud-related chargebacks that fit into the service’s payments protection policy. Because customers won’t have to leave your website to complete sales, your conversion rates should improve as well.

If I were a merchant looking for a third-party payment option to add to my traditional merchant account, I’d surely consider Amazon Pay. It has name recognition, an intuitive interface, and plenty of users who already have Amazon accounts. In fact, I’d most likely decide to try the service for several months, check sales reports for an uptick in transactions, and go from there.

Overall, Amazon Pay rates an excellent 5 out of 5 stars, and we highly recommend it for eCommerce merchants.

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