Amazon takes another step into PayPal territory, starts subscription payments services

It is almost impossible to think today that Amazon once was just a book e-tailer. Today Amazon sells physical goods, is a marketplace for others to sell physical goods, sells hardware (Kindle) and sells e-books for the Kindle, makes 5% of its revenues from its AWS cloud service and recently started delivering groceries at people's doorsteps. And during its journey it has made several small and big, old and new businesses obsolete and bankrupt. And now it's gunning for the payment service -- PayPal, which accounted for 43% of eBay's revenue last quarter.

Yesterday, the online giant launched a new service to allow customers to automatically pay recurring charges. These include payments like monthly subscription fees or phone bills, and all of this using just the Amazon log-in details.

And Amazon has a major advantage -- 244 million active customer accounts. That's a massive user base who could potentially use the service. In fact, that number means that Jeff Bezos' engineers are free to test out any service at the drop of a hat.

The online payments services arena has been long dominated by eBay, but Amazon is ready for the assault.

40 percent of Amazon's sales comes from third-party sellers. With the new service, Amazon will be able to make more profits from this base.

This announcement comes at a time when PayPal is flaunting its own mobile payments capabilities and Jeff Bezos is unveiling on June 18, what is widely believed to be a 3D smartphone. What we can be pretty sure of is a battle to take over the mobile payments market.

Amazon sets to be expanding into any and everything that people may expect them to be in.

Turns out the behemoth has been testing its new service over the last several months with several start-ups, including a mobile phone company. The startup's product manager admitted to customers spending 30 percent more on its website when they used Amazon's recurring payments.

The biggest hurdle for Amazon has been to convince the sellers that their data is safe at the transactional level and it is ensuring that in the new service by just collecting the currency transaction information.

On the customer side, Amazon's credibility as a trusted company will help them try out many newer services where, previously they might have had to use their credit card information.

The payments field has been a hot sector for all the big players. Google runs its own phone-based payment system called Google Wallet. According to analysts, Apple is building its own and Facebook is hoping for regulatory approval to launch its payment system in UK.

And talking about Indian market, here is an interesting analysis of Why Flipkart & Snapdeal should be worried about the Big Daddies of global retail