Payments Views


Amazon PayPhrase – One Size Doesn’t Fit All fancies itself, with some justification, as a trialblazer in eCommerce. We spoke with Amazon recently to get a better sense of PayPhrase and how it might be used by today’s consumers.

Amazon PayPhrase is a new checkout concept that is designed to provide consumers with a convenient way to use the payment and shipping details on file with Amazon. You’re probably thinking this sounds a lot like Checkout by Amazon. It does. Substitute some names and it also conceptually sounds like PayPal Express Checkout. Heck, it even conceptually sounds like Google Checkout! But it’s not.

Online checkout, as we all know it, is mostly about consumers logging in with a username/password, entering or selecting a payment method from one already on file, entering or selecting a ship-to address from one on file, reviewing the order details, and clicking on “purchase”.

Amazon shortened this process in the mid-1990s with its patented 1-Click checkout process. Their observation at the time was that many customers repeatedly pay with same payment method and the same ship-to address. By keeping them on file, and establishing clear defaults, Amazon could shorten the purchase process down to a single click — and eliminate a ton of friction at the same time.

Amazon’s observation this time around is that convenience still matters — in fact, it matters more than ever — but that not everyone uses the same payment method and ship-to address on every purchase. One size doesn’t fit all.

Here’s how it works:

You go to to set up a PayPhrase (and PIN) that uniquely maps to a payment method and a ship-to address. You can set up multiple PayPhrases that are all tied to your Amazon account. You could, for example, establish one PayPhrase for when your want to use your personal card to have something shipped to your home, another for when you want to use your corporate card to have the goods shipped to the office, and a different one for when you want a gift shipped to your parents.

When I’m shopping at J&R Electronics, for example, for a replacement toner cartridge for our overworked Glenbrook printer, I simply toss what I want in my shopping cart, click on checkout, enter “Glenbrook Office”, my PIN, and I’m done. The cartridge is shipped to my office address, charged against my corporate AmEx card, and the receipt is in my email inbox.

We’ve all seen many things labelled as “easy” or “convenient”. But I’ve got to say this really does look like a new convenience. The key here, I believe, is that PayPhrase keeps the checkout in the merchant context. I didn’t leave their store. I wasn’t redirected to another website. Instead of selecting my checkout options, I simply enter the relevant PayPhrase. The purchase confirmation page, where I enter my PIN, is a pop-up on top of the merchant site.

PayPhrase is built on top of Amazon Payments and works today on or any third-party merchant that uses Checkout by Amazon. So its potential impact is somewhat broader than the original 1-Click — maybe more so, given how large the Amazon user community has grown.

If that’s all there was to PayPhrase, I would like it. But wait! There’s more! In addition to mapping payment and shipping preferences to each PayPhrase, you can also set up assorted limits and approvals with each PayPhrase. You can, for example, limit how much can be purchased with a PayPhrase or what approvals are required.

An office manager could enable their staff to order supplies from, but require all PayPhrase purchases come back to them for approval. Before order acceptance, the manager receives an email purchase approval request from Amazon. In addition to approval, PayPhrase in this context offers the manager the added security of constraining the ship-to address to the office.

Parents can use spending limits to handle online allowances. They can setup a PayPhrase with unique spending limits for each child knowing that purchases can only be sent to the home address and are within their online allowance. For larger purchases, there’s even a configuration setting that lets unused monthly allowance budgets rollover to the next month.

Amazon is positioning PayPhrase as an innovation in eCommerce convenience, which certainly seems like the case. But I’m intrigued by the online security possibilities that are inherent in its structure. Separating the Amazon login credentials from the Amazon spending credentials seems like a good idea. And I really like being able to limit the spending power of payment instruments, restrict the purpose of a purchase, etc.

I’ve long argued with Glenbrook colleagues that payment cards today are too spend-centric and too easily abused. Maybe the banking industry could learn something from Amazon about both convenience and security.

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11 years ago

this makes it sound easy for the consumer – but how easy is it for the merchant to get their money from amazon? If we have to wait 7-10 days for money to get to our bank accounts – that will increase the order processing time – not smart to ship without having the payment up front. After researching on Amazon for a method of payment, I have yet to find out it works for the MERCHANT – sure would like to see some ‘merchants’ reviews. At least with PayPal, the funds are available immediately to pay the suppliers and process the order same day. They also offer a debit cart to get money out of the merchant account quickly, AND like Discover card, the MasterCard debit card earns interest with purchases made using the MasterCard/Debit Card to suppliers. The money paid by the consumer is actually in a real bank – not somewhere in ‘time and space’ waiting on someone’s books. When can Google or Amazon do that?