Amazon Flexible Payments Service
I enjoyed attending the Amazon Flexible Payments Service Webinar.
Here’s my take away from the Webinar.
Account-to-Account (Amazon calls them Account Balance Transfers “ABT”) transactions are priced at 1.5% +.05 cents per transaction. Why? That seems expensive to me. Visa and MasterCard don’t make that much on a transaction. The Visa & Master Card issuers and acquirers don’t make that much on a transaction. These transactions are AWS’s lowest cost transactions and they charge the most for them?
Oh, that’s right, what about ABT transaction risk? We’ll good question. It seems to me that Amazon has both accounts registered with them and if they’re doing a good job validating their accounts then the risk of ABT transactions should be lower than say, an online credit card transaction between a card holder and merchant. Does that sound right?
Banks refer to an ABT transaction as an “on-us” transaction. Why do they call it an “on-us” transaction? Because it happens between two accounts within the banks financial system and many institutions don’t have a charge for an “on-us” transaction.
On-us or ABT transactions have “cool” attributes that I really like as follows:
No Authorization Step
On-us transactions more simple than multi-processing step sequences required when accepting credit or debit cards.
Immediate Settlement
They are “settled” quickly, in fact, one might say, immediately, like a transfer from your checking account to your savings account.
May be Final
On-us transactions may be, depending on the contract governing the transaction, final. What does that mean? It’s like a Fed Wire transfer. Once it’s sent, the money is gone. Does the Fed allow a bank conducting a fed wire transfer allow for it to be disputed by the customer or by the bank sending the transaction on behalf of the customer? I think the intent of “final” is that it cannot be reversed. One would need to review the AWS FPS agreement to determine the “finality” of such a transaction.
I like the FPS sand box for developers. Unlike the credit card processors and/or traditional Issuing and Acquiring Banks, I like the openness of the service (e.g. API specs are published on-line).
When will on-line person-to-person payments happen? FPS, may be it. One must be a business to accept credit cards; however, one might say that ABT is person-to-person.
The presenter gave the example of Mechanical Turk as an application that is using ABT payments. I’ve used Mechanical Turk and like it. It does make it practical to conduct micro-payments; however, that pricing model for Mechanical Turk transactions seems to be exclusive to Amazon.
If you’d like to see the slides of the presentation they are available here. Amazon Flexible Payments Webinar slides available. (Windows Only, disappointing)
Have a thought or comment, please share it?
