Amazon announced that more than 33 million customers have used its Amazon Payments transaction processing platform to make a purchase, and that transaction volume near doubled in 2016 — a statement that follows reports the e-commerce giant has been in talks with PayPal about an online payments partnership.
During 2016, Amazon expanded the payments service into France, Italy and Spain. The number of active merchants also grew by 120% as merchants were added from more verticals, including government payments, travel, digital goods, insurance, entertainment, non-profits and charities. Amazon Payments also introduced new in-store experiences with Moda Operandi and Amazon Books.
Among other highlights, Amazon Payments was used by customers in more than 170 countries in 2016; and peak transaction volume occurred on Cyber Monday, Nov. 28. In addition, the Amazon Global Partner Program launched in the U.S., Germany, U.K. and Japan, with 50 service providers signing up in the first eight months.
It took Amazon about four years after launching its payments initiative to reach 33 million users, and 2016 appears to have been the biggest year yet, as 10 million new users joined and transaction volume surged.
A couple of other highlights are worth noting: Amazon said more than 50% of its payments users also are Prime members, showing that Amazon's most loyal customer group is largely on board with its payments offering. Also, 32% of Amazon payments transactions last year were made on a mobile device, which shows that Amazon is closing the loop on sales via mobile in more ways than one.
2017 could prove to be an even bigger year and a turning point for Amazon in the payments space, as the checkout-free notion defining its Amazon Go grocery service has many people believing Amazon is not looking to redefine convenience grocery shopping as much as it is looking to redefine the payment process.
Meanwhile, reports of discussions between Amazon and PayPal come about a year after Amazon seemed pretty firmly against the idea that it could partner up with the digital payments company. Granted, the more recent reports about a possible tie-up are coming out of PayPal and not Amazon, but a lot can change in a year, and a lot definitely has changed on the payments landscape within the last year: We have seen Apple Pay expand its availability for e-commerce payments, and partner with e-commerce platforms like BigCommerce. We have seen Google press forth on efforts to expand Android Pay. We have seen retailers such as Wal-Mart launch their own payments offering (and other, like Target, aren't far behind.) PayPal hasn't exactly been standing still either, working with the card companies to expand its reach and value.
Does it make sense for Amazon to align with PayPal? It could make it easier for hundreds of millions of PayPal users to buy things from Amazon using PayPal. Amazon continues to see strong sales growth, though it could always use more as its marketing and shipping costs are rising. Still, Amazon's payment growth in the last year suggests it may not be struggling on that front, and maybe touting its payments membership and transaction growth this week is its way of (again) telling PayPal it's in no hurry to partner up.