Amazon Flexible Payment Service

Just as I’m catching up on Amazon’s web services, they introduce another one – this time aimed at payment processing. My first impression though is pretty underwhelming. The one thing that FPS seems to have going for it is that it is extremely flexible. Most processing systems focus on moving a specific amount of money from a credit card to the sellers account. FPS provides options for combining micro-payments, direct debit (and proprietary Amazon funds) as well as recurring payments etc. In other words, FPS provides a ready made billing department rather than just an order processing system.

The trade off though is that FPS (at least at first glance) looks expensive. For example, Google checkout charges 2% + 20 cents per transaction regardless of value. Amazon charge 2.9% + 30 cents for credit card transactions (for amounts of $10). Amazon has much cheaper rates for direct debit and Amazon Payments, but credit cards are the main payment method over the web.

It’s even worse for Amazon when you consider that Google is processing payments for free until 2008 and after that gives $10 of free transactions for ever $1 spent on AdWords. You’d definitely want to be taking advantage of the flexibility that Amazon provides.

I also can’t see any benefit from using Amazon’s services together so I’m not sure what prompted Scoble’s comment:

Add this to Amazon’s existing S3 and EC2 services and this is significant.

There’s no reason you’d pick Amazon’s payment processing over Google checkout unless you really wanted to consolidate your monthly bills. It’s still a good move for Amazon to keep externalizing the stuff they have to build for their store anyway, but they seem to be lacking a competitive edge in this case.

What am I missing?