Yesterday Microsoft needed to pay my company a fairly small amount of money over two months for allowing us to advertise their Windows 7 product on one of our websites with a medium-sized logo of their product in a sidebar during that two months. Since we aren’t in the IT world and don’t really have anything to do with operating systems, we decided to accept their offer. In setting up the information Microsoft indicated they would pay us the $200 “sponsorship” fee through the Amazonpayments gateway.
I have been watching the retail giant Amazon getting into cloud computing in a rather big way, but I didn’t know they had their own payment system. So I read all the fine print and learned about the payment system that wants to be PayPal’s big brother.
I am very leery about small businesses that provide services accepting PayPal because they tend to be heavy handed when disputes arise between parties. PayPal is not very friendly toward businesses that provide services (such as a web-design firm). Their system is only really set up to protect parties that sell a product to another. When you read PayPal’s fine print they can easily withdraw money from an attached checking account in the event of a dispute. Most merchant services agreements allow this practice but most balance the interests of both parties in a disagreement.
So I was curious about how easy it was to accept Amazonpayments and how their disclosures and written policies stacked up against PayPal.
The first thing I noticed was that Amazonpayments wants to be in the same space as PayPal and Google Checkout. They want to be a trusted party that facilitates the transfer of funds between two parties, whether in an ecommerce environment or when one party wants to initiate payment to another party.
I have read many merchant services agreements over the years. Amazonpayments, like all others in this industry has a multitude of policies and agreements that both consumers and businesses agree to when they set up their accounts.
Before posting this, I read each of the consumer agreements as well as the business user agreements. I was impressed about how well they are laid out. Their website has an easy to navigate listing of all their agreements. It is easy to tell what their agreements and policies cover by simply looking at the title.
Amazonpayments policy regarding disputes is regrettably similar to that of PayPal. It only covers physical goods sold and doesn’t cover services or downloaded software. I have heard horror stories of graphic design firms and other service providers who accepted a PayPal payment from a customer for services that where not physically covered products only to discover that the unscrupulous buyer disputed the transaction within the 90 days allowed. Under both PayPal and Amazon’s policy, Amazon would withdraw funds equal to the disputed amount and would “protect” the buyer. It is too early to tell how tough Amazon is on this policy, but I suspect they will be as tough as PayPal. After all, it is the consumer that they are trying to protect, not the merchant.
One way to get around this if you provide a service or sell software that the user downloads is to mail a CD-Rom with the software, artwork, or website code to the end-user. Your tangible product then becomes the CD-Rom instead of the intellectual property. You may have a stronger argument when that unscrupulous buyer takes advantage of the system.
After looking at the policies and user agreements I think Amazonpayments is worthy a look by small business owners. In a year we will have some data points to measure how business friendly their service is, but if their very well thought out service offerings in the cloud computing space and their proven track record as one of the top online retailers is any indication, Amazon’s entry into the payment services market may be good for everyone.
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