Shopping on Amazon (NASDAQ: AMZN) is about to get much easier for consumers who don't have a credit card or bank account allowing them to open a PayPal account for online purchases. Amazon has invested in Bill Me Later to provide a deferred billing option to shoppers. The investment gives Amazon a stake in Bill Me Later and is expected to be finalized by the end of the first quarter of 2008.
Bill Me Later is used on many websites and is most helpful to customers who don't have a credit card (or aren't comfortable using a credit card online) or who don't have a bank account enabling them to open a PayPal or other similar account (or aren't comfortable opening such an account). For Amazon, the Bill Me Later option could make shopping on the site more accessible to a new group of customers.
Here are the basics of how the Bill Me Later payment option works:
- A customer who selects Bill Me Later for their payment option will be asked to input their birth date and the last four digits of their Social Security Number.
- The Bill Me Later service will then do a quick credit check, and if the customer is approved, their transaction will be processed. A bill will be sent to the customer's mailing address for payment at a later date.
- Each time the customer uses the Bill Me Later service in the future, they will be required to input the last four digits of their Social Security Number again.
- Sometimes the customer will have to go through additional verification steps.
While Bill Me Later is definitely not the best choice for all customers, it does provide opportunities for Amazon to draw new customers from a target audience the company was not previously penetrating.
Do you think adding Bill Me Later as a payment option will make a significant difference in Amazon's sales? I'm thinking no, but I suppose it can't hurt to have the option available. The primary negative I can think of is if the credit criteria related to approvals are too high, and few people are actually approved. That would create a negative public relations backlash that I'm sure Amazon doesn't want. Can you think of any other pros and cons to Amazon's new investment in Bill Me Later?
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