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How does Amazon Pay work?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20232 min read

With Amazon’s reach now extending from grocery shopping to big-budget television, it makes sense that they’ve moved into the payment processing space with a new service: Amazon Pay. If you’re a merchant that deals mainly with online sales and you want to optimize your checkout process, Amazon Pay may be a viable payment option for your business. How does Amazon Pay work, and, on a more basic level, what does Amazon Pay mean? Find out everything you need to know about Amazon’s online payment processing service, right here.

What is Amazon Pay?

Let’s start with the basics: what does Amazon Pay mean? Essentially, Amazon Pay is an online payment method that enables Amazon customers to use the payment details stored in their Amazon account to make purchases on third-party ecommerce sites. Businesses can also build/offer Alexa skills to accept Amazon Pay voice orders from customers who own an Alexa device, which may be an enterprising move if the trend towards “voice payments'' continues.

A wide range of sites integrate with Amazon Pay, including WooCommerce, Shopify, and many other providers. Amazon Pay charges a per-transaction fee to merchants in the US. However, there aren’t any setup fees, monthly fees, annual fees, or termination fees to worry about, and you don’t need to invest in any hardware items either. The fees you’ll need to pay are as follows:

2.9% + 30 cents (web and mobile transactions)
4% + 30 cents (Alexa transactions)
Additional 1% for cross-border transactions

It’s important to note that while Amazon Pay processes payments on a daily schedule, it can take anywhere from three to five days for the funds to show up in your account.

Now that we’ve explained a little more about what Amazon Pay means, let’s answer the fundamental question for merchants: how does Amazon Pay work?

How to use Amazon Pay

Learning how to use Amazon Pay is relatively simple. For merchants, the steps you’ll need to follow look like this:

Set up your Amazon Seller account.
Select Amazon Pay as a payment system in your ecommerce platform.
Agree to the payment and security policies outlined by Amazon Pay and your ecommerce platform.
Configure your ecommerce site so that it can communicate with Amazon Pay.
Add the Amazon Pay button to your site’s checkout process via a plug-in or a piece of code.
Test your new payment process to ensure that everything runs smoothly.

And you’re done! For customers, it’s a super-simple process as well. They’ll simply click on the Amazon Pay button in checkout, where they’ll be redirected to an Amazon-hosted page and asked to sign in. Then, they’ll return to your site to complete checkout, selecting the credit/debit card stored in their Amazon account that they want to use during checkout. After the payment has been completed, they’ll receive a receipt from Amazon Pay.

Benefits of Amazon Pay

There are a range of benefits associated with using Amazon Pay as a merchant. Most notably, it’s a brand that consumers know and trust. If your checkout process isn’t viewed as a secure option, customers may abandon their cart. Adding a trusted payment method brand like Amazon Pay can help to put your customers at ease. You should also think about the benefits of streamlining your checkout process more generally. If checkout takes too long or the merchant requires too many details, cart abandonment issues can ensue. Adding Amazon Pay can help save your customers time, as they won’t have to re-enter their payment details, contributing to a more seamless checkout experience.

Amazon Pay alternatives: GoCardless

Clearly, there are a range of benefits associated with Amazon Pay. However, if your business is focused on online sales, you may wish to look at alternative options that provide support for a range of payment methods. There are many different online payment processing service options, from Stripe and Square to PayPal, but GoCardless is another option that’s worth considering. GoCardless is a global payments solution that enables businesses to collect payments from 30+ countries. While taking processing payments can be expensive, GoCardless offers a per-transaction rate of 1% + $0.25 (Max $2.50) for customers in the US, making it a competitive option for merchants everywhere.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.