Thursday, February 05, 2009

Amazon Flexible Payment System - micropayments finally cracked?

Amazon have just announced they are finally opening up their API's to their credit card processing platform

So does this mean that micropayments have finally been cracked?

It certainly helps out users because you can easily process a transaction without entering in credit card details (it uses the credit card details you have stored on your amazon account) and for content providers the transaction fees are finally reasonable to low cost content access.

For Transactions >= $10:
1.5% + $0.01 for Amazon Payments balance transfers
2.0% + $0.05 for bank account debits
2.9% + $0.30 for credit card transactions.

More importantly For Transactions < $10:
1.5% + $0.01 for Amazon Payments balance transfers
2.0% + $0.05 for bank account debits
5.0% + $0.05 for credit card

So lets say you want to sell a 24 hour access pass to your cartoon library content for 20c, thats a pretty reasonable charge for the consumer.

Up until now this transaction would not have been possible as the access fees would have been eaten up in transaction costs.

But using the Amazon FPS your fees would be ($0.20 x 5%) + $0.05= $0.06
This means the content provider would receive $0.14 for selling this 24 hour limited access license.

I don't know about you but that's probably way more than what they would have made in click throughs or display advertising.

There are some issues in that it requires a USA based credit card for content providers to collect money (hopefully this is a temporary issue for offshore web content providers) but it doesn’t look like there are any requirements for incorporation in the USA or IRS tax collection issues.

The API’s are well documented and easy enough for any competent web developer to get you started with under a few hours of development work.

What do you think?
Post your comments on the blog if you think this could change how you do some of your business.



  1. Cool summary, Dean!

    Now, there's a related article that explains why this isn't enough:

  2. Hi Aleks,
    Unfortunately you missed the part in the article about "The advocates of micropayments also forget the basic law of supply and demand".

    Newspapers are a poor choice for micropayments as the internet is awash with supply of "news content".

    If you have something valuable (or even not so valuable) people will pay for it as long as it's easy to pay for.

    I think the 99c Apple iPhone store is a better example of where Amazon FPS can be a real advantage.

    The transaction just needs to be frictionless.