A lot of hobbyists and small business owners are now writing books for Kindle that once would have been PDFs or blogs. Amazon gets a cut of each sale and then pays the writers (such as myself, she said modestly) fee-free using Amazon Payments. We sellers also sell old books and other used "stuff" and again we get a fee-free payment through Amazon Payments. Other hobbyists have blogs set up where they have te affiliate links to books or hobby items for sale on Amazon. People buy the stuff on Amazon, the affiliate gets a tiny percentage for making the sale, and again Amazon pays the affiliate through Amazon Payments. In other words, Amazon Payments is a payment method but it is also a way to encourage small hobbyists etc. to get their fellow hobbyists to buy books and other items on Amazon. Otherwise, people sell off-Amazon items on sites like eBay, our own blogs, or other hobby sites, and we get paid by Paypal. However, Paypal charges me a fee and Amazon payments is free. So I now put a little more business Amazon's way where I never used to think of selling anything at Amazon or as an Amazon affiliate. See?
That's where Amazon Payments is helping Amazon make more money...they are attracting small hobbyists they wouldn't have previously attracted.
Originally Posted by
redtop43
I don't pretend to know Amazon's view of this particular product, but I will observe that Amazon's business model involves making huge investments to become everything to every consumer. Remember how one time they were just a purveyor of mail-order books? Then books and movies? Now, everything, to the point where they have big-box stores shaking in their boots.
There are plenty of market segments where Amazon is investing big-time in becoming the market leader, even at the expense of short-run profits. I don't know what synergies they see between the payments business and the retailing business, but I know this, Jeff Bezos is a hell of a lot richer than I am, and he didn't get that way (at least so far) except by having more products work out well than badly.