Amazon Could Reach 200M PayPal Users With New Partnership

  • February 1, 2017 at 10:17 PM EST
  • By Adam Blair
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Once Amazon and PayPal were rivals, but very little remains static in the fast-moving payment industry. In a move that could provide a “win” for both parties, the e-Commerce giant and the globally popular payment service are in talks to make PayPal an option for Amazon customers.

“We have been in conversations with Amazon,” said PayPal CEO Dan Schulman in an interview with Bloomberg News. “We’re closing in on 200 million users on our platform right now. At that scale, it’s hard for any retailer to think about not accepting PayPal.”

PayPal’s platforms, which include Braintree, Venmo and Xoom, are available in more than 200 markets globally, and consumers and merchants use it to receive money in more than 100 currencies. It’s a popular option for e-Commerce: In a recent survey of UK retailers, 66% said PayPal is the most popular payment option after debit and credit cards. In contrast, Amazon Payments was cited by only 19% of respondents.

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In 2015 PayPal separated from former owner eBay, a fierce Amazon competitor, to expand its transactions business. But Amazon’s ambitions include establishing its own payment business; in fact, the retailer hired Patrick Gauthier from PayPal in 2015 to lead the initiative.

Despite these potential roadblocks, analysts see the move as positive for both companies. “Amazon is interested in making it as easy as possible for customers to buy, and many first-time users or infrequent users may not have an Amazon account or credit card on file,” said Brendan Miller, Principal Analyst at Forrester in an interview with Retail TouchPoints. “This makes the checkout process a bit more cumbersome, especially on a mobile device. There’s a chance that infrequent shoppers do have a PayPal account, which would help speed up the transaction experience. Eventually Amazon would want to migrate those customers over to its one-click shopping experience, but PayPal would be happy to get the incremental volume in the meantime.”

In addition to streamlining checkout, PayPal possesses a wealth of consumer data that could be a valuable asset for Amazon and its network of marketplace sellers. “PayPal has a long history of making eBay a successful marketplace,” said Miller. “I’m sure there are conversations happening about how PayPal can use its data analytics capabilities to provide more customer insight data to Amazon.”

PayPal’s success around the world would provide Amazon with a “Good Housekeeping”-style seal of approval. “PayPal is a highly trusted brand name around the globe,” said Miller. “In some countries people trust PayPal more than their bank. Amazon can borrow that halo to gain more trust and usage in less developed e-Commerce markets.”

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