Why PayPal Should Be Worried By Amazon's New Checkout Service

Amazon has just launched two new payment services that strike at the heart of the PayPal business: Checkout and Simple Pay.

Amazon's new Checkout service provides E-tailers with the same robust and powerful one click ordering system that has made Amazon a favorite with millions of online buyers.

Simple Pay, meanwhile, is a basic payment service that does not support advanced Checkout features like real-time shipping and tax calculation, order cancellations and shipment tracking.

So why should PayPal be worried? First off no one does E-tail ordering and payment better than Amazon. It's a great experience. Compare the Amazon E-tail experience to countless other Websites and the others pale in comparison. Can anyone who has used PayPal say with a straight face it's a better experience than Amazon? Not in a million years. Amazon makes you feel like you've got a one to one relationship with the Website. PayPal is more of generic experience.

What's great about Checkout is that consumers already signed up with Amazon don't have to re-enter their account information from credit card to shipping address when they use another Checkout enabled E-tailer Website. Some analysts are claiming that large E-tailers may shy away from Amazon Checkout because they compete head on with Amazon. Those E-tailers should really ask themselves if they can provide the same E-tail one click experience themselves? Not without making a huge capital investment without any certainty of success.

It's about the customer experience stupid! And believe me Amazon is going to make sure there is a Chinese wall that guarantees its retail site will not tap into the Checkout site, suck up competing E-tailers customer data and go after those customers themselves. Amazon is building a big business around offering its own services to other E-tailers and retailers. And it's not going to risk that big business by snatching their customers' data. Amazon is going to be successful here.

eBay had better enjoy the robust PayPal sales gains. They may become a distant memory sooner than you think.