Kickstarter’s recent defection from Amazon Payments in favor of Stripe could be an indication that Amazon is going about payments all wrong.
Amazon Payments first launched in 2007 to bring its shopping cart experience to other online merchants. Its platform, Flexible Payments Service, was a customizable API that allowed merchants to tailor the checkout experience to their needs. At the time, with little else on the market, FPS was a great tool for Kickstarter’s all-or-nothing funding model, which required a payment method that would hold backer contributions and payment processing until the end of a campaign. Kickstarter only charges backers if a campaign reaches or surpasses its funding goal.
But this year Amazon stopped updating FPS — it will be sunsetting the service in favor of its recently rolled-out Login and Pay feature. Consequently, the user experience on Kickstarter got clunky. Backers were redirected to an Amazon Payment page in order to pledge and then would have to go back to Kickstarter to complete their contribution. It wasn’t a great experience for Kickstarter creators either. In order to launch a campaign they’d have to create a business account with Amazon Payments.
However, Amazon’s new one one-size-fits-all Login and Pay method doesn’t work well for Kickstarter’s model. Though it leverages Amazon’s vast store of consumer payment credentials to enable an easy checkout process on other sites and may work well for many online retailers, a burgeoning class of service apps seem to be looking elsewhere.
Stripe counts Instacart, Lyft, TaskRabbit, Squarespace, Shopify, and Foursquare among its supported sites. The company prides itself on being both consumer- and developer-friendly. As a user you wouldn’t know you were using Stripe, because there’s no branding. Unlike with Amazon Payments, consumers will have to fill out their payment information, which may be a drawback. But Stripe can also be tailored to a seller’s needs. If its clients are any indication, the company is on an upward trajectory to become the payments backbone for many up-and-coming sites.
In contrast, Amazon Payments supports a variety of small merchants, listing only a few major retailers like fashion brand AllSaints and airline Wi-Fi provider Gogo Inflight. Mostly Amazon Payments seems to cater to the technologically uninformed: traditional brick-and-mortar retailers looking to cash in on a growing digital market. What’s more, merchants tend to offer up Amazon Pay alongside PayPal, Visa, and Mastercard. Essentially, these merchants are offering as many payment account options as they can, to avoid the dreaded shopping cart abandonment. But that means, while Amazon may have a perfectly simple checkout process, there’s not a whole lot that differentiates it from PayPal and other competitors with large swaths of consumer payment information.
If Bezos is keen on payments, and the rollout of products like Amazon’s mobile card reader seems to indicate he is, then perhaps Amazon should focus on being more than just another payment method.