Will Amazon Ditch Bill Me Later After eBay Takes Over?


Today eBay said it would spend $945 million to buy online payment company Bill Me Later, but the folks over at Amazon.com aren’t likely to welcome eBay as Bill Me Later’s new corporate overlords. Amazon holds an equity stake in the payment processing company and is its top customer — with competitor eBay moving to buy it, Amazon has some thinking to do.

Amazon doesn’t have a board seat at Bill Me Later, and as such was probably not involved in the acquisition talks. The question now is whether it will continue to offer Bill Me Later as a payment option. As far as merchants go, Bill Me Later is cheaper than credit cards. But so far Amazon.com, which previously scorned PayPal because of its ties to eBay, has been non-committal about its plans. It said in a statement, “Currently, Bill Me Later is still available as a payment option on our site, but I can’t speculate as to whether we’ll continue to offer them going forward.”

From  a payments perspective, eBay has chosen wisely with this buy. PayPal is a debit-oriented program, while Bill Me Later caters to those who are shy about using their credit cards online but don’t want to deal with the hassle of PayPal by offering them credit after they enter their information. While that may seem downright foolish in this economic environment, Bill Me Later investor Mike Kwatinetz of Azure Capital Partners says the company is able to quickly adjust the amount of credit it offers customers.

PayPal has the largest number of the top online retailers using its service, but Bill Me Later has an opportunity to process more transactions, according to data issued last month by research firm Cowen & Co. PayPal’s penetration rate of the top 300 U.S. e-commerce companies rose to 35 percent as of September from 28 percent at the end of last year, but Bill Me Later has $31.6 billion in addressable sales, compared to $26.1 billion for PayPal. Bill Me Later’s top customers (other than Amazon) include OfficeMax, Apple, Newegg, and QVC. Underscoring Amazon’s eBay aversion? All of those merchants also accept PayPal.



There are several reasons that this deal makes sense:

1) Platform: BML has built and deployed a real-time underwriting decision platform. (mentioned above by tvlampsn) This is unique. It allows “transactional credit underwriting” as opposed to account-based underwriting. PayPal does not yet have this. Amazon doesn’t have this. It’s not an easy thing to do. This is a critical component of a successful, disruptive credit offering ON and OFF eBay.

2. Presence: BML has sold this service very well, capturing a large number of top 200 online merchants representing a large portion of potential payment volume. (mentioned above by the author)

3. Placement: The article mentions that, other than Amazon, there is a large overlap of those merchants that accept PayPal and those that accept BML. This is true. But if you look at most of these accounts, BML almost always has better, higher or more upfront, placement on those sites than PayPal does. For example, BML logos are often represented at the top of the homepage. PayPal almost never has placement that well placed. This makes sense because merchants want shoppers to know that they can shop without worrying about how they’ll immediately pay their purchase. This placement drives awareness and ultimately transaction and payment volume share.

4. A Perfect Name. I believe that many online shoppers, when checking out, select the BillMeLater option, not because they know and understand the credit company BML, but because they think that it’s an invoicing option offered by the merchant. To them, it’s not a payment company or a new credit card account, but rather an INSTRUCTION they’re giving to the merchant. “Please bill me later for this purchase.” For Top 200 merchants, this allows the shopper’s trust in the merchant brand to carry the relatively unknown BML. I don’t think BML would have been nearly as successful as a start-up payment company if they’d been named, say QuickCredit or EasyCredit.

I think the deal makes sense. But only time will tell if the price is right. The $1.5 billion that eBay paid for PayPal was considered high at the time that deal was done in 2002. But few would argue that the eBay/PayPal deal hasn’t been one of the smartest acquisitions of the last decade.


The reason why nothing is like BML is the way that they are able to assess the creditworthiness of someone applying. They are said to be able to do this better and quicker than banks and their lines of credit.

This is what eBay is buying that Amazon can’t build. Unless they license the technology from eBay/BML in which case it would be easier for them to use the original.

If anything, Amazon is the company to try to pull this off. They’ve moved away from being a retailer and are evolving into a platform.

Larry Chiang

well-written! I think it is interesting that of the “payPal mafia”, very few have taken a whack at p2p payements.

In my guestimation

(1) I think BillMeLater is one of the biggest adoptions of a new form of payment since Discover and Amazon would be hard-pressed to recreate the level of consumer adoption.

(2) eBay is smart is doing this deal to take on a new form of payments. Quite frankly, GooglePay could have bought BMLater and shed it’s one-hit-wonder status. What I mean is that GPay could have left the Internet and gone real world with Google waiving merchant fees and making it less costly for real world and online merchants to process payments.

(3) CONFESSION: I learned about this deal over lunch with a VC. It is bad when a dude who reads coverage is telling you about a deal squarely in your industry. yeah, I have been in credit/payments industry since 1989

(4) BMLater could have been a bank (industrial loan corporation). I predict that with the consolidation of credit card firms and the contraction of consumer credit choices, major retailers (Walmart, Target, Amazon, GE) will be allowed to explore ILCs. These Industrial loan corporations were frowned upon two years ago but I am guessing will be reopened and reexplored now

(5) A hidden point of trivia is that BMLater decreases abandoned shopping carts. Merchants save money on processing and make money selling more stuff. Google so missed the boat. Congrats to eBay.

(6) Opportunity Knocked. If I were a VC not to avoid, http://gigaom.com/2008/01/08/9-vcs-youre-gonna-want-to-avoid/ I would chip in money on BMLater2.0 and get a figure head “mobster” from PayPal to start it.

If you hear of something like this email or text me chiang9@duck9.com or 650-283-8008


Nay sayers, but no one could see the phenonmenal growth BML experienced in a short time either. I say play your cards close to your chest and see what happens. It could another breakthru since Bill Me Later, Inc has sustained itself and customer base during economic hard times.


ditto for @bobby m – for less than 900 million, amazon can use their team of highly skilled engineers to build a clone of this service with tighter integration and customization offerings for amazon merchants and all amazon sellers – and what a timely waste of money in light of ebay’s layoffs….

the real question: if this was such an opportunity, why wasn’t the paypal unit building this kind of offering two years ago?

Bobby M

Me thinks eBay threw money towards competitive grwoth, rather than acquiring yet another payment service. Lets face it, there is nothing unique about BML. However, it now cuts into Amazon’s payment options for its customers. So was this a strategically correct move – yes. Was it worth the price – No.

It took ~$1 Billion to buy out BML – that is ridiculous. Amazon will invest about 1% or less in creating a new payment method in line with BML. Sure it will end up being a proprietary system catering only to Amazon’s needs, but the feature will exist. The “bleeding” of Amazon is not justified here if eBay is going to bleed more – and that is the bottom-line here.


At nearly $15 stock, eBay(read Paypal) must be looking very good as a hostile takeover….that would be a very nice day


To call Paypal debit oriented is completely absurd. Paypal process mostly credit card payments and is in fact an intermediary to standard credit card companies, their share in prepaid accounts and ACH debits is minimal.


Marginal analysis in this post. Obviously Amazon was involved in acquisition talks and apparently passed at that insane price. $150 million in ’09 is wishful thinking at best. Ebay has been hoodwinked yet again in the acquisition game. Amazon, unlike Paypal or Ebay could create a service like BML that actually works.

Has anyone added up the price of all of Ebay’s acquisitions? Skype (4.2b), Paypal (1.5b), Rent.com (.4b), Shopping.com (.6b), Verisign Payments (.5b), Bml (.9b), Danish classified ads (.4b), Butterfield (.3b), Stubhub (.3b), Half (.3b), Fraud Sciences (.2b), various international auction sites (?).

Phil Michaelson

Interesting. In due diligence, an acquirer often contacts customers of, and shareholders in, a target. I wonder if Amazon made some commitments to eBay.

Jason Kiesel

You can count on this acquisition by Ebay to be yet another failure. BillMeLater is a crummy service and doesn’t provide any value add. It’s basically another credit card when you do get approved. One more company to have my private data, and one more company that can leak my private data. No thanks. I’ll stick to Visa/Mastercard. Whoever is managing Ebay’s acquisitions sure isn’t doing a very good job.

Jason Kiesel
Founder & CEO

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