December 12, 2007
Amazon to Customers: ‘We’ll Bill You Later’
Amazon.com announced yesterday that the company was taking a stake in the Bill Me Later payment service and that it would make it available to consumers on its website.
As the name describes, the Bill Me Later service enables customers to make online purchases now and pay for them at a later date. Shoppers click on the Bill Me Later option when checking out. The service asks the shopper for the last four digits of their Social Security number along with date of birth. The service does a quick credit check, okays the purchase and pays the merchant. Shoppers then receive a bill a couple of weeks later and consumers pay through online banking or mail a check.
“Bill Me Later has developed a very customer-centric method to make online shopping even easier,” said Matt Swann, vice president of payments at Amazon.com in a press release. “We are pleased to make the convenience of Bill Me Later available to our tens of millions of Amazon customers.”
Credit cards remain the primary method for purchases made online, but Bill Me Later is seen as an alternative for those who have security concerns or do not carry a card for various reasons.
“Amazon.com and Bill Me Later share the same commitment to making shopping easy for consumers,” said Gary Marino, CEO of Bill Me Later. “Just as Amazon invented a new and better way for people to shop online, Bill Me Later has created a new and better way for people to pay for purchases online.”
The terms of the deal have not been disclosed. The transaction is expected to close in the first quarter of 2008.
Discussion Questions: Do you see alternative payment options becoming more popular in e-commerce? What impact would that have on e-tail sales? What are the implications for Amazon and Bill Me Later as the result of the former’s investment in the latter?
BrainTrust
Recent Discussions
Discussion Questions
Poll
Too easy credit is one of the causes of our current credit crisis. Offering the consumer flexibility is always a good idea unless it cost too much. With the mood in America likely to change from easy to difficult credit, maybe it is time to bring back the old lay-away plans. This time, do it with monthly credit/debit card payments. When paid in full, ship.
As credit card interchange rates from Discover, American Express, MasterCard, and Visa soar, every retailer craves more profitable payment alternatives. eBay led the way by acquiring PayPal, which is becoming more popular at non-eBay sites. Bill Me Later will help Amazon’s bottom line, too.
The credit card interchange rates will continue to soar because (1) someone has to pay for all the shopper incentives (free travel, points for merchandise, rebates) and (2) the small number of national credit card brands is an oligopoly. This small group can easily copy each other’s price increases. A retailer who haven’t got the capital to buy PayPal or Bill Me Later can use the current banking crisis to acquire a small bank. There are profitable American banks that can be purchased for 7 figures.
Or you can start your own bank. Look at Cabela’s. They own World’s Foremost Bank. Of course, Target owns its credit card, but you don’t have to be the size of Target or Cabela’s to own a bank. And if your size isn’t so large that it seems threatening, like Wal-Mart, no one will stand in your way.
I agree with Susan. The credit-oriented demographic will embrace this openly but I’m not sure that it serves them beyond helping them to accumulate more quick debt on impulse purchases. It’s good for Amazon and nice as an alternative payment option but they need to be careful.
The potential for payment options online is very high but it is certainly a risky business. As long as the retailer has minimized the risk, this should be a money maker for them.
Some mortgage companies right now are prime examples of this slippery slope. One of these days something’s gotta give on the “spending America.” There are many examples of $150K households with credit card debt over $50K–forget about the mortgage. I say, enter this arena with caution.
While some additional consumers may now be willing to buy online due to not having to offer up credit info, most will still prefer to “earn the points” or rebates or whatever that their card probably offers. I think Mark is all over the real potential in this area, which is to combine the retailer’s own affinity card and banking facility to drive loyalty and reduce processing fees.
The sales impact will be good. The entrapment to a deeper debt concept won’t. What will follow “We’ll Bill You Later”?
Great concept, it helps Amazon keep the momentum going. The cost to them is only their cost of funds for the delayed period of time and the increased sales should more than offset that cost. Yes, I see the idea spreading; that’s the beauty of the web–ideas move quickly.
I think this is a wonderful idea. The bad debt collection could essentially be a non-issue. Since they are running a credit check, they can easily find a company to outsource bad debt collections. The cost of the outsourcing can be offset by the saving in exchange rate fees that are not being paid to credit card companies. The number of bad debts will be proportional to what Amazon sets as a minimum credit score.
Sorry, folks. This is a terrible idea. Amazon now leaves itself open to numerous problems of trying to collect debt after goods are shipped. There will be huger loss prevention issues and fraud. If it ain’t broke, why fix it? There are many other ways (free shipping, additional gifts or perks, money off on next purchase) to be customer centric that won’t cost the manpower it will take in debt collecting. Good luck to them.
I have to agree with Michael above. I understand the benefits of delaying payment for those who don’t have a credit card, but it seems to be too difficult to enforce payments from people who traditionally are late to pay their bills.
Most banks offer rechargeable credit cards that are one-time use. That would seem to be the better option for those who prefer not to carry around a Credit Card or use it on the Web.
I just got my first Bill Me Later statement. I had signed up and used the service to purchase items from Petco because it offered me free shipping and $5 off the order. Why not? Well… I was surprised to see that Bill Me Later has assigned my account a 16-digit number (just like a credit card) and sent me a booklet explaining the 19.99% interest rate charged on any unpaid balance, etc. (I need not pay the amount in full). Bill Me Later is simply a different type of credit card — an online only credit card if you will.
I paid the balance in full and will continue to use the service “responsibly” in order to take advantage of free shipping and other discount offers. But for many people, this additional temptation to acquire more debt cannot be good. So for Amazon, how much will this expose them to uncollectable debts and is that worth the increase in sales the service will generate? Are the shoppers signing up for Bill Me Later higher risk than shoppers who use their credit cards to make online purchases?
I agree, this new payment option can be a slippery slope, especially for consumers who are already over-extended with debt. I would also be concerned about providing social security information online.
More Discussions
Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?OpenAI Names the Infrastructure Standard for Agentic Commerce
Will OpenAI or Google (or another entity) set the gold standard for agentic commerce?Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?
Too easy credit is one of the causes of our current credit crisis. Offering the consumer flexibility is always a good idea unless it cost too much. With the mood in America likely to change from easy to difficult credit, maybe it is time to bring back the old lay-away plans. This time, do it with monthly credit/debit card payments. When paid in full, ship.
As credit card interchange rates from Discover, American Express, MasterCard, and Visa soar, every retailer craves more profitable payment alternatives. eBay led the way by acquiring PayPal, which is becoming more popular at non-eBay sites. Bill Me Later will help Amazon’s bottom line, too.
The credit card interchange rates will continue to soar because (1) someone has to pay for all the shopper incentives (free travel, points for merchandise, rebates) and (2) the small number of national credit card brands is an oligopoly. This small group can easily copy each other’s price increases. A retailer who haven’t got the capital to buy PayPal or Bill Me Later can use the current banking crisis to acquire a small bank. There are profitable American banks that can be purchased for 7 figures.
Or you can start your own bank. Look at Cabela’s. They own World’s Foremost Bank. Of course, Target owns its credit card, but you don’t have to be the size of Target or Cabela’s to own a bank. And if your size isn’t so large that it seems threatening, like Wal-Mart, no one will stand in your way.
I agree with Susan. The credit-oriented demographic will embrace this openly but I’m not sure that it serves them beyond helping them to accumulate more quick debt on impulse purchases. It’s good for Amazon and nice as an alternative payment option but they need to be careful.
The potential for payment options online is very high but it is certainly a risky business. As long as the retailer has minimized the risk, this should be a money maker for them.
Some mortgage companies right now are prime examples of this slippery slope. One of these days something’s gotta give on the “spending America.” There are many examples of $150K households with credit card debt over $50K–forget about the mortgage. I say, enter this arena with caution.
While some additional consumers may now be willing to buy online due to not having to offer up credit info, most will still prefer to “earn the points” or rebates or whatever that their card probably offers. I think Mark is all over the real potential in this area, which is to combine the retailer’s own affinity card and banking facility to drive loyalty and reduce processing fees.
The sales impact will be good. The entrapment to a deeper debt concept won’t. What will follow “We’ll Bill You Later”?
Great concept, it helps Amazon keep the momentum going. The cost to them is only their cost of funds for the delayed period of time and the increased sales should more than offset that cost. Yes, I see the idea spreading; that’s the beauty of the web–ideas move quickly.
I think this is a wonderful idea. The bad debt collection could essentially be a non-issue. Since they are running a credit check, they can easily find a company to outsource bad debt collections. The cost of the outsourcing can be offset by the saving in exchange rate fees that are not being paid to credit card companies. The number of bad debts will be proportional to what Amazon sets as a minimum credit score.
Sorry, folks. This is a terrible idea. Amazon now leaves itself open to numerous problems of trying to collect debt after goods are shipped. There will be huger loss prevention issues and fraud. If it ain’t broke, why fix it? There are many other ways (free shipping, additional gifts or perks, money off on next purchase) to be customer centric that won’t cost the manpower it will take in debt collecting. Good luck to them.
I have to agree with Michael above. I understand the benefits of delaying payment for those who don’t have a credit card, but it seems to be too difficult to enforce payments from people who traditionally are late to pay their bills.
Most banks offer rechargeable credit cards that are one-time use. That would seem to be the better option for those who prefer not to carry around a Credit Card or use it on the Web.
I just got my first Bill Me Later statement. I had signed up and used the service to purchase items from Petco because it offered me free shipping and $5 off the order. Why not? Well… I was surprised to see that Bill Me Later has assigned my account a 16-digit number (just like a credit card) and sent me a booklet explaining the 19.99% interest rate charged on any unpaid balance, etc. (I need not pay the amount in full). Bill Me Later is simply a different type of credit card — an online only credit card if you will.
I paid the balance in full and will continue to use the service “responsibly” in order to take advantage of free shipping and other discount offers. But for many people, this additional temptation to acquire more debt cannot be good. So for Amazon, how much will this expose them to uncollectable debts and is that worth the increase in sales the service will generate? Are the shoppers signing up for Bill Me Later higher risk than shoppers who use their credit cards to make online purchases?
I agree, this new payment option can be a slippery slope, especially for consumers who are already over-extended with debt. I would also be concerned about providing social security information online.