Monday, August 06, 2007

Amazon vs. Paypal vs. Google Checkout

Amazon, in its bid to become the underlying utility of the new web world, today confirmed what had been rumored earlier: a payment service that will compete with PayPal and to some extent, the nascent Google Checkout services.

Just to be clear, Google Checkout and Amazon FPS are not building their own payment service, where PayPal has a clear lead. Instead they are using the credit card infrastructure to enable payments and online transactions.

As a discrete offering, Amazon Flexible Payment Services (still in beta) may seem like a me-too service. However, when juxtaposed against the whole gamut of web services being offered by the company, it is a Trojan horse like strategy, one that can start to eat away at PayPal’s business.

It is not a surprise, that both Google and Amazon want a slice of PayPal’s cake. In the most recent quarter, PayPal had net revenues of $454 million, up 34% over the $339 million reported in Q2-06. More importantly, PayPal Merchant Services transactions jumped 57% to $4.92 billion globally from the $3.13 billion reported in Q2-06.

PayPal has become a defacto standard in the online transactions and payment services, and for anyone to have a chance to beat them there are two options: use money (and price) to lure the eCommerce players, as Google is doing with its Checkout Service. The second option is to offer a developer friendly service, that can allow developers to embed a payment solution into their offerings. Werner Vogels, CTO of Amazon explains it best:

Using a capability called “Payment Instructions” developers can easily create the charging model that works best for them. For example, they can charge customers in small increments until their accumulated balance reaches a limit, pay a percentage of a digital transaction as a royalty, earn a commission on a marketplace transaction, or allow one customer to pay for another customer and limit their usage to a specific amount.

As developers who are already using Amazon’s EC2 and S3 web services start to embed FPS, what they are doing is slowly shifting the momentum away from using PayPal and other rivals. Allowing the buyers to use their Amazon credentials to buy the goods (or services) from these developers, they are also increasing their economic opportunity.

A small web-app developer can now build, host, process and get paid for his efforts right over the Amazon infrastructure, without having to spend money upfront. As Amazon Web Servies team notes on its blog:

Seriously, the 69 million active Amazon.com customers can now use FPS to pay for the applications that you’ll undoubtedly want to build. On the other end, the first wave of FPS applications will be available very soon.

While I can’t put it as eloquently as uncov does, but I do agree with their thesis that this is going to cause major headaches for PayPal.

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Remember Webvan? So Does Amazon

Check out Amazon Fresh - a new invite only service from Amazon that looks eerily similar to the quintessential 90’s Internet flameout, Webvan.

The new service promises speedy at-home delivery of groceries, including fresh produce, at “competitive everyday prices.” It’s available only in Seattle currently, and has not been officially announced. But at least one person caught a glimpse of an Amazon Fresh truck driving around downtown Seattle.

Users select and pay for groceries on the site. They can then choose to pick up the items themselves locally, or, with a minimum order size, have them delivered next day within a one hour time slot. Groceries will also be delivered to doorsteps pre-dawn in a temperature-controlled container.

A year ago Amazon began experimenting with sales of non-perishable food and household items, but did not deliver them directly and perishable goods were not available.

If you are a Seattle reader, keep your cameras handy. We want a picture of the delivery truck.

Webvan, which had a spectacular IPO and quickly expanded to 26 cities, went bankrupt in 2001. Before closing down, Webvan had acquired competior HomeGrocer. Coincidentally, Amazon was an investor in HomeGrocer.

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Listen To Your iTunes Library On The Web With Anywhere.FM

anywherefmlogo.png Anywhere.fm has launched a new online music player that looks and feels a lot like a web based version of the iTunes player, sans the music marketplace. Like iTunes, you can load maintain a music library, reorganize your songs into play lists, and veg out to visualizations. Anywhere.fm's iTunes bulk uploader makes it easy to get up and running with your existing library.

The company leverages the web to add portability and a social layer to their music player. There is currently no cap on the number of songs you can upload to the player, so you can create a potentially unlimited music library you can listen to anywhere. Streampad is a nearly identical product with less polish.

Like a host of other social music startups, Anywhere.fm has also added music discovery features. While not as robust a discovery engine as a Last.fm and company, users can find new songs by listening to their friends' play lists and will soon be able to find new friends based on a music compatibility score. However, due to copyright concerns, playlists from other users can only be streamed as radio stations. Playlists must be a couple songs long and played in a random order. Although, Anywhere.fm isn't following official online radio play guidelines like Lala, which require station play lists to be at least three hours long before publishing.

The company competes in the increasingly crowded online music locker services like Mp3tunes, Maestro, imeem, Streampad, Songbird, and MediaMasters. The service does benefit from being simple, free, and social, but incumbents have a steady head start. Hype Machine, RadioBlogClub, and Blogmusik are also other low hassle ways to listen to music at work.

Anywhere.fm is looking to make money outside of charging users for their service. They are considering the obvious step of affiliate music sales for songs you don't own, inserting audio ads in radio streams, and selling music directly. Currently the player lists indie music from Garage Band.com, which could turn into a direct point of sale.

Anywhere.fm is a Y Combinator startup.

Update: Good video review is here.

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Amazon Flexible Payments Service Launches

As predicted, Amazon launched a new payments web service today called Amazon Flexible Payments Service, or FPS. It will compete with Paypal and Google Checkout.

FPS, Amazon says, "is the first payments service designed from the ground up specifically for developers" and "unmatched flexibility in how they can structure payment instructions." Payments can be made by credit cards, bank account debits, and Amazon Payments balance transfers.

The most important feature: people can pay using the same login credentials and payment information they already have on file with Amazon. That means people don't need to have their credit card and other personal information stored at yet more ecommerce sites. For payments over $10, Amazon will charge 2.9% + $0.30. This matches PayPal but is higher than Google, which is eating fees to gain market share (Google charges 2% + $0.20).

This may quickly become Amazon's most popular, and most profitable, web service. Anyone can now leverage their tens of millions of customers and provide a very simple payment option.

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Use GMail or Yahoo! Mail? Change Bookmarks for Better Security

This is Robert Graham posing with the GMail website open on his laptop.

Rob demonstrated to a live audience how he can successfully hack into web based email programs like GMail, Yahoo Mail! or Hotmail using the IP Address and user name (login) without requiring any password.

Let's not go in the very technical details but he used some sniffing tools called Ferret (to copy the GMail cookies to his computers) and Hamster (to use the cookies in his browser). [Details at ZDNet, TG Daily]

What can you do to prevent someone else from reading your GMail or Yahoo Mail ?

Rob's method works when you are using the HTTP mode to access your email (http://www.gmail.com/). Therefore the trick is to always use Secure Login.

Here's what you can do to safeguard your email in public wi-fi hotspots - use https:// instead of http:// - the entire session will be encrypted and the cloning cookies method will fail:

For GMail: https://mail.google.com/mail/

For iGoogle: https://www.google.com/ig

For basic HTML version of GMail - https://mail.google.com/mail/?ui=html

yahoo mail secure website Alternatively, you can install the CustomizeGoogle extension of Firefox that will always force the SSL mode in GMail incase you forget to manually type the https:// GMail URLs.

Highly recommended also because Customize Google will also encrypt your Google Docs, Google Reader, Google Web History and Google Calendar session incase these Google services share the same cookie with GMail.

For Yahoo! Mail - Check the Secure Mode link that's available just beneath the "Sign In" button.

Related: Recover Yahoo! or GMail Passwords

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