Why Amazon Can't Compete with Silicon Valley For Payments: Page 2

Amazon launched a new service this week for buying stuff with your Amazon username. Here's why it will fail.
Posted October 9, 2013

Mike Elgan

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Also: Apple's Passbook and iBeacons initiatives will drive the use of Apple for payments for services and physical goods, which will drive familiarity with and acceptance of Apple for online payments as well.

In addition to having better authentication and more credit cards, Apple has the advantage of not being a retail competitor to the online stores that will choose systems for payments.

Google's Advantages

Google is probably in a good position to become the number-two online retail payment system. The company already has a Sign-in with Google program, which is quickly becoming the leading way to log into sites of all kinds online.

As part of its Sign-in program, Google enables merchants to socially promote products on Google+. Buyers can click to buy directly from the posts. It's like the opposite of being a competitor to retailers, it gives them a viral way to promote their products combined with easy purchase.

Google also owns the world's most popular operating system. The Android OS is on more phones than any other, and this is a huge advantage for mobile payments -- and authentication, as Android OEMs benefit from Apple's creation of acceptance for fingerprint readers on mobile phones.

Google has been chipping away with mobile wallet and online payment programs for years. But Google's killer advantage is scale and integration. They get scale from the number of users they have both online (everybody's got a Google password) and on phones, plus they integrate Google passwords with Google Sign-in with Android with Google+ social product promotion.

The Other Silicon Valley Payment Competitors

Facebook, PayPal, Square and other Silicon Valley companies will also vie for the online payment space. But these are unlikely to succeed as well as Apple's and Google's programs.

Facebook has a trust problem, and for good reason: They're untrustworthy. (For example, they lie to users every day.)

PayPal struggles with making payments simple and appealing to the masses of consumers.

Square has a great thing going with its free card swiper gadgets at small, brick-and-mortar retails stores, but it's online payments program can't compete against the giants.

Ultimately, it's going to be Apple and Google that dominate the online payments business.

Amazon has the right model -- a clear system with APIs that combine login with payments. They have consumers' trust and confidence. And I predict that they’ll add fingerprint scanners to their future tablets and a future line of smartphones.

But they'll never overcome the fact that they compete directly against the very companies that will be choosing systems for login and payments.

Apple and Google, on the other hand, are more appealing partners for retailers. They both own the major platforms. They both have advantages in authentication and security. And Apple has more credit cards on file than anybody.

Sorry, Amazon. You can't win this one.

Photo courtesy of Shutterstock.

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Tags: Facebook, Amazon, ecommerce, Apple

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