Amazon vs. Paypal vs. Google Checkout


[qi:012] Amazon, in its bid to become the underlying utility of the new web world, today confirmed what had been rumored earlier: a payment service that will compete with PayPal and to some extent, the nascent Google Checkout services.

Just to be clear, Google Checkout and Amazon FPS are not building their own payment service, where PayPal has a clear lead. Instead they are using the credit card infrastructure to enable payments and online transactions.

As a discrete offering, Amazon Flexible Payment Services (still in beta) may seem like a me-too service. However, when juxtaposed against the whole gamut of web services being offered by the company, it is a Trojan horse like strategy, one that can start to eat away at PayPal’s business. [digg=]

It is not a surprise, that both Google and Amazon want a slice of PayPal’s cake. In the most recent quarter, PayPal had net revenues of $454 million, up 34% over the $339 million reported in Q2-06. More importantly, PayPal Merchant Services transactions jumped 57% to $4.92 billion globally from the $3.13 billion reported in Q2-06.

PayPal has become a defacto standard in the online transactions and payment services, and for anyone to have a chance to beat them there are two options: use money (and price) to lure the eCommerce players, as Google is doing with its Checkout Service. The second option is to offer a developer friendly service, that can allow developers to embed a payment solution into their offerings. Werner Vogels, CTO of Amazon explains it best:

Using a capability called “Payment Instructions” developers can easily create the charging model that works best for them. For example, they can charge customers in small increments until their accumulated balance reaches a limit, pay a percentage of a digital transaction as a royalty, earn a commission on a marketplace transaction, or allow one customer to pay for another customer and limit their usage to a specific amount.

As developers who are already using Amazon’s EC2 and S3 web services start to embed FPS, what they are doing is slowly shifting the momentum away from using PayPal and other rivals. Allowing the buyers to use their Amazon credentials to buy the goods (or services) from these developers, they are also increasing their economic opportunity.

A small web-app developer can now build, host, process and get paid for his efforts right over the Amazon infrastructure, without having to spend money upfront. As Amazon Web Servies team notes on its blog:

Seriously, the 69 million active customers can now use FPS to pay for the applications that you’ll undoubtedly want to build. On the other end, the first wave of FPS applications will be available very soon.

While I can’t put it as eloquently as uncov does, but I do agree with their thesis that this is going to cause major headaches for PayPal.



I just want to add this, We have an online store with Google CO as one of the payment options, We are thinking of canceling it since we got countless problems with their transactions and there is NOBODY to help you, they only offer email support and it takes days if not weeks for them to get back to you, So my advice is STAY AWAY!


i just ordered cell phone via google checkout, however they sent the wrong one, return it and wait to have what I ordered. Its been 2 weeks, no one took care my mails, even google. maybe their processes are best but don’t care to solve your problem. now I cancelled order and wondering will they refund my money. sorry but this time google sucks. paypal is much more easier and gurantees customer satisfaction. you could be the biggest firm in world but it doesn’t gurantee you would do best whatever you do!


I’m reading so many complaints about Google Checkout that have nothing to really do with Google. One person complained about a purchased on you complaint about a cell phone. Let’s take a realistic look at this.

Say you purchased a product or service from a repubtable company that uses a regular merchant account (i.e. no payment processor as the one’s mentioned). On your bank or CC statement is the name and sometimes the phone number of the company you purchased the product or service from. No mention of what bank or merchant system was used.

In other words, if this were any other transaction you would be complaining to the company, not Google Checkout. For the person that had issue, you admitted that you knew had a history of this. Therefore the problem was not Google Checkout so much as it was should have not set their shopping cart to allow payment. Or, they should have notified you. It is not Google Checkou’s job to let you know if there is a delay in shipping.

As for the cell phone you should have contacted the company as best you could. Once again, it’s not really Google’s job to keep tabs on your order, when it was shipped, may be shipped, or if it will even be shipped.

I think people have gotten too used to payment processors like PayPal that have a dispute resolution system. People start to get lazy and not want to contact the company they purchased the product from. They wan’t a one-click solution where they say they are not happy and expect the payment processor to investigate the entire situation.

I always wonder how payment processors can have such lower fees than real merchant systems when they are expected to do so much MORE work than a merchant account provider.


Agreed, it seems everyone is blaming Google Checkout for the sellers issues. Think of it this way, whether or not you use Google Checkout to “hide” your information from the buyer, you are still using the same EXACT credit cards as you would’ve before.

The difference is, your credit card is not exposed to a seller you don’t trust, for further scandalous activities. Your email is also not exposed, preventing possible spam. But Google IS NOT, and will never be, the credit card company itself. If you have an issue, you first contact the actual buyer. It doesn’t matter if it’s for missing order receipts or an unshipped, damaged or late item, none of them are Google Checkouts responsibility. If in fact the actual seller is unreliable or won’t solve the problem, then you call your CREDIT CARD company, and let them know what happened, the credit card company will require the seller to show proof that they shipped your item or they replaced / repaired it. If they can’t, the credit card company will snatch the money right back out of their hands and give it back, they might even charge them a fee…. Stop blaming the middle man, all Google Checkout does is protect your personal info.

The reason PayPal has a dispute resolution system is because they have an entirely different system, which allows account-to-account spending, money that doesn’t go through a bank or a credit card just from one paypal user to another, therefor they are the only link between the seller and buyer, and need to supply some sort of dispute resolution.


As a merchant, I want ease of use. Amazon is a bit more of a pain to setup, and the information seems plenty, but disorganized. If I have to spend 20 hours integrating a payment processor due to it’s difficult to set up structure, I am going to stay with what I have. C’mon Amazon, you can make an easier set up than this, take notes from Google and Paypal or you will NEVER be a competitor.


You Know I perfer Paypal over google, As a buyer if I have a problem with the seller Paypal is more opt to help you out, plus you can actually talk to a person at paypal. Try and get a refund through google. yea right they make you contact the seller and wait forever. So far its been two weeks an no refund. This would have been solved days ago with Paypal. Just wanted to let everyone know if your wondering betwee the two Paypal is far better at looking out for the customer and will refund the money gauranteed. Google won’t offer this. I pan on to never use google check ever again.


Haha, wow, what a joke…. PayPal doesn’t look out for anyone in particular, they have a select set of rules, whoever follows them the most wins the bag…. PayPals “guarantees” are so full of loopholes it’s not even funny. They won’t cover the seller from buyer fraud if it’s a virtual item, but hey, if I ship a stamp in a box, that means I shipped something, so then they cover you… As for you saying if you had the same problem with paypal, it would’ve already been solved. NOT TRUE, paypal gives the seller 15+ days to respond to a customer problem. If they don’t respond in 15 days the customer wins by default. If they do, and the customer and seller can’t come to an agreement, the customer escalates it to a claim, again another 15 days or so is given to the buyer to prove the delivered the product in said condition, or to refund the money…. So unless your google experience took well over a month, I’m sure it’s nothing worse then paypal…. Overall I’d take any company over paypal, paypals customer support and randomly “selecting payments for review” then holding them for a week, and if you can’t proove you shipped it (virtual items too) they just give the money back to the buyer…. the buyer who also got their product… To top it off, if you randomly start making a lot more money as a seller, they lock your accounts down preventing more sales, then they question you and want you to show proof that the product you are selling is yours…. They also held 3% of a friends income for 30 days ( once he started making $750+ daily ), saying it was some sort of “insurance”… BS we all know it’s just them trying to hold it and earn interest on it…. Also if they think something shady is actually going on, instead of doing all of the above, they confiscate all the money in your account. Via the agreement you sign when you create a paypal account, they can hold it for SIX months, one friend had over $10,000 held…. So tell me now that paypal is better then google when a buyer can’t even sell you a product for fear of paypals random sour practices towards sellers….. The only thing paypal has on Amazon or Google is a debit card linked to your balance.


Tibursio nailed Paypal right on the head. Talk about a scam of a company! Anything is better than the Nazis at Paypal.


Just tried GOOGLECHECKOUT – what a disaster – didn’t help that I had attempted to buy something from, who said the item was in stock. Placed an order, and although I was unaware of what was happening, it went through Googlecheckout – no problem, I figured. However – after 2 days of waiting for shipment info, I started checking what was happening. Turns out that the item was out of stock and had no idea when it would be available (they are apparently famous for this sort of thing – advertising that something is in stock when it isn’t). Problem was, GoogleCheckout had already charged my credit card. Canceling the order was not straight forward, but I finally got it straight. I doubt that I would have been notified that shipment was delayed. This particular item appears to be backlogged for over a month on Amazon. I’d have been out the $$$ for at least a month or more. Never again will I use Google Checkout.


I tend to echo Dave’s comment above. This stuff about the infrastructure, particularly from the standpoint of the consumer, is largely a distinction without a difference. That being said, I think these services (particularly Amazon) will be making inroads into this market using something woefully lacking at PayPal: customer service. I’ve personally been very impressed with the Amazon Web Services team’s responsiveness and level of interest in our development efforts. Within 48 hours of announcing AcuInvoice’s support for Amazon FPS, I received an email from the Business Development Manager at Amazon Web Services asking to see a demo of what we had done. You’ll not see this sort of thing from PayPal, and over the long haul it has the potential to pay off big. They’ve also got a pretty robust developers forum, which has been helpful. We’re fans.

Da Godfather


I tried Google checkout as a layman buying stuff on Other than giving me $20 off my first purchase (which was the reason I tried it in the first place), Google checkout didn’t seem to offer me any reason to use it again.

As an online shopper, I don’t see what Google checkout gives that Paypal doesn’t.

And I’m reserving judgement on Amazon – hopefully it won’t be a science project with little benefit to consumers – not that choice is a bad thing!


I use Google Checkout for the sale of advertising space on my website. It has done amazing things for me, I have been able to integrate the store into my advertising page. It’s quick, easy, and secure. I would recommend it to anyone interested monetizing their blog.

David Watts

I wonder where this meme came from that PayPal is a payment service but Google Checkout and now Amazon are just “using the credit card infrastructure to enable payments.” This is a distinction without a difference. If you are handling the money from transactions, you are a payment service. The companies that just help merchants connect to the card infrastructure, without handling the money, are gateways like CyberSource and (soon to merge). GC and Amazon are not gateways (not to mention that Amazon will allow bank funding as well as credit cards).


I thought they meant that you can have an actual paypal account that carries a balance like a savings/checking account and use it to buy things (even has a debit and credit card now), but that google and amazon are only middle men. They aren’t accounts themselves that you make payments WITH, just companies you can make payments THROUGH.

David S. Evans

Google Checkout is a significant threat to PayPal and Amazon’s new venture because it doesn’t have to rely on transaction fees to make its continued investment worthwhile. My guess is that Google ultimately wants to capture the transaction information to increase the accuracy and value of search and advertising placement. Schmalensee and I call platforms that have different revenue sources “intersecting catalyst” (see–which is what these payment players are.

Damon Billian

Glad to see that Amazon has really turned the corner in the past year…

PayPal (used to work for them): I still think it will be hard to beat a fairly entrenched player w/an international presence. What I really think this underscores? PayPal needs to make sure that they are a technology company that focuses on ecommerce (my personal opinion is that they’ve shifted to more of a marketing company now).

Michael Vu

Amazon is ready to rock and roll. Their stock prices have been surging for the past 4 months. On a day where the market had a small crash, it shot up $15+ dollars because Harry Potter tripled their profits. Amazing Amazon. Bezos is a genius.

A social network for sports fans.


I use all three, I prefer Google Checkout, as a buyer it hides personal information data from the Seller, also it hides my e-mail address. It has the lowest fees among all three. If Google is serious with this, they could turn it better than Paypal in no time. If the eBay users sue Ebay for restricting Paypal only in their sites, then many will use Google Checkout.


can you guys tell me is there any live sites with accept amazon fps specially like domain hosting provider ?

Peter West

Actually Amazon FPS does not rely only on the credit card infrastructure, they also allow direct bank transfers and balances held at the Amazon payment service. Transactions against each of them has different pricing.

Isabel Wang

FPS is in a stronger position than Google Checkout, because Amazon already has 69 million customers’ credit cards on file. That’s equal to nearly half of PayPal’s user base. Besides, Amazon has much more knowledge than PayPal on customers’ purchasing history. Amazon even has data on what products each user looked at but didn’t buy – or added to his wish list. The amount of info Amazon has access to will continue to grow with each 3rd party transaction FPS processes. I agree; a real headache for PayPal.

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