Why You Shouldn’t Ignore Amazon’s New FPS
Amazon has been highly-regarded in the developer circles over the past year with solutions that take advantage of Amazon’s scale and pass the savings down to the developer. S3 and EC2 (like S3 but for scalable servers) have been widely adopted by coders for utter reliability, cost and not having to deal with the dirty work - maintaining servers and facing the issue of scaling when growth is vital. Yesterday Amazon released a new service for developers to bounce off the walls with - Flexible Payment Services.
In a nutshell, FPS is everything Amazon has learned about dealing with money transactions, processing credit cards and more, wrapped in a shiny API. This is a godsend for thousands including solo developers trying to sell a simple app they’ve made, people setting up online stores of their own, and the list goes on. Up until now many companies had to work directly with VeriSign to process online payments or reluctantly deal with PayPal, which usually brings up horror stories of eBay transactions gone awry. FPS will change everything.
Above all, I think FPS is going to be widely adopted for its rock-solid micro-payments support. More and more start-ups and online companies are offering small services to their users which cost almost nothing. Unfortunately, getting the money for these small services has proved to be a big problem previously, with high credit card transaction and processing rates. You have probably dealt with micro-payments many times before - iTunes Store songs, those $1 Facebook gifts and the like, although most people consider micro-payments as even cheaper items, within the cents range. FPS can run a transaction as low as 1 cent.
As an example of something someone could build with FPS utilizing micro-payments support, I have been thinking about a simple system enabling blog readers to use an opt-in subscription/donate model; readers would help support a blog with small donations or micro-payments. Ideally, sending a micro-payment with Amazon FPS would be an easy, one-click process, encouraging users to donate whenever they read an article they enjoyed, et cetera. The system could even be integrated into one’s comment system - “Hey, I really enjoyed your tutorial on XYZ, $1 is attached“.
Barriers of entry will be annihilated. More people will be encouraged to pursue that idea they’ve left on the back burner because they were unsure how to go about collecting payments. PayPal should be worried. As for another issue, I can say that people trust Amazon more than PayPal. If you ran a simple random sample and gave those 5,000 people a word association test, I bet that a good percentage of people would pair PayPal with scam or fraud. Don’t get me wrong, I have been using PayPal for years without any issue; people just have a belief that PayPal isn’t good with all of the “beware PayPal” type stories floating around.
However, you can’t directly compare PayPal and Amazon FPS. PayPal is a complete payment management/transfer service, where as FPS is more of a tool to build something to handle similar needs, albeit in a specific situation. Although there will no doubt be someone trying to build a direct PayPal competitor based on FPS. Here’s the main advantage of using FPS for your next store, service or web app - millions more people already have Amazon accounts than PayPal or Google Checkout accounts, making it tremendously easy for them to use your service. They don’t have to make another account to pay for something.
Technically Speaking
Amazon Flexible Payment Services is a boon for several reasons: no startup costs, monthly fees or minimums to get started and it’s Amazon-backed. As such, they have a helpful Resource Center with helpful code libraries (C#, Ruby, PHP and Java currently) and sample applications (Ruby, PHP and Java currently). Security-wise, FPS is just as secure as S3 and other services that might be used in almost mission-critical situations (doubtful that anyone would use S3 for anything mission-critical, it doesn’t have a Service Level Agreement). With each payment transaction, you must get a short-lived security token from Amazon to allay the possibility of someone maliciously capturing the transaction and having their way.
A token is a unique, secure handle to the Payment Instruction. A successful payment transaction requires three compatible tokens, one each for the sender, the recipient and the caller.
Each application built on FPS is recommended to use (their sample PHP application uses it) an X.509 security certificate, which is then in turn used by OpenSSL.
In Short
Amazon’s recently released Flexible Payment Services will provide developers, small companies and large companies alike to handle money transactions with ease while maintaining complete control. You will see many, many people build things around FPS solely for managing micro-payments. That code monkey 3 doors down in your dorm can make a site and provide simple tech support for 75 cents a request, while that popular blogger could send out schwag to his readers, only asking for the price of a stamp and envelope. A start-up could charge a dime for each message sent by non-pro account users within their social network, Pownce could charge 30 cents for each 10MB that you go over your allotted storage space; the possibilities are endless.
Would you take advantage of sending micro-payments through Amazon if a tech blog you read daily put up a micro-payments system up in lieu of bulky advertisements? What are your thoughts about FPS?
Update: Snook believes that micro-payments with FPS only work or work best when using Amazon Payments (which must have a balance in it before sending micro-payments) instead of just someone’s bank account or credit card. I think he’s right.
I applied for an FPS account and FYI they ask for things like DL#, bank info, credit card, address and business name. Also, I have been messing with Amazon’s digital downloads sample micro-payments application. If you decide to use it as well, be careful if putting it on your public server and placing your AWS keys in SampleApp/usecases/config/developer.ini as it can be publicly readable if you don’t give it the correct file permissions.
You make the plugin to do the donation routine, and I’ll be the first to donate $10 to you for it.
This is really cool, Paul, thanks for sharing the news. I am in love with everything Amazon lately, they are one of my favorite tech / web companies. I think I might buy some of their stock sometime soon.
Thats an interesting questions but unfortunately it wouldn’t apply to majority of readers or viewers. I think most of your fans or frequent readers wouldn’t blink before giving money for your work. But many will will not want to do that. I think initially a lot of people will donate money and then it will slow down.
The idea of free internet, or at least free content is still pretty popular and ads seem the best way of revenue.
Anyways I think Amazons new service is going to be a good competition for Paypal and Google. It’s about time we have an alternative to paypal. I really don’t like the multi step process Paypal has, there integration is not very good yet. I think developers will do a good job integrating Amazons service to make it easier for users.
Akshay, I can understand your sentiment about ads being the best way of revenue, however in my experience it’s a quite different. Most ads are too ugly for me to even consider and I try to maintain a certain caliber of quality here that most advertisers can’t meet, which is why I’ve always fallen back to maintaining my own ads, even though that has only worked out so-so.
Paul, don’t get me wrong. I dont like ads, but as a revenue source for websites seems like its the thing right now. At least for blogs and content websites. One of reasons I like this blog is because it has limited and focused ads. You maintain your own ads, I hope other bloggers follow on your steps. I am happy that you and other bloggers are looking into other revenue models.
I think there is potential for it on certain sites because it would give it a good balance of advertising and payments. Some sites are over advertised and this could possibly be a solution to help segment their site from others in the same way that pstam.com does from similar tech blogs. Overall it will be difficult to get people to start paying for something that was once free (especially a non physical object, like Internet content).
Naturally, it would be an opt-in only type thing. Content would still be free but users that found value in a particular post can send some gratuity if they’d like.
$1 is not a micropayment
I was going to implement it for our services the same day it was announced, but then realized it is currently available to businesses in the States.
Anyway, I definitely look forward to it.
As for the micro-donations, I think it would be an interesting thing to try out, even though I’m not sure if it could be a huge success, since just a few people are into donating for something they can still get for free.
@mind - I thought the same thing until I started searching for micropayments and iTunes store sales were the canonical example. Of course, I know that most peoples’ definitions of micro-payments fall within the cents range, with Amazon FPS being able to charge as low as a single cent. Thanks for the comment.
Another great ‘tool’ - as with all such things the key will be having content that is worth charging for :-)
If anyone can do that you should be able to.
I’ve been waiting to hear about this one.
Something I don’t understand, how does the checkout procedure work? Are buyers supposed to have an Amazon account in order to checkout or can they just enter their CC information and the API processes the payment (E.g. Authorize.net and Paypal Pro do it this way).
While I have yet to buy anything from an FPS service, I am 99% sure you just login with your Amazon account and the rest is taken care of. You are directed to a co-branded UI, Amazon-hosted page for the final checkout I believe, similar to what paypal does.
That FPS ability to accept small ‘micro’ payments is awesome, its not new what Amazon is doing but they have built a monster convenient system for consumers. Its excellent and sure to be a big billion dollar success story.
The title of your post is right-on-the-money, both online sellers and buyers should take advantage of this system.
Mark
DigitalMoneyWorld
nice article ;) $500 is attached
oh dang, its not working yet..
Paul, a $2.00 “micro-payment” is still $2.00 even if it comes from Adsense. The difference is the user doesn’t actually have to pay anything in the case of Adsense (or other ads). I think there is a potential for the kind of revenue model you’re talking about, but I’m not sure how competitive it will be, at least initially, compared to using well-placed, non-intrusive ads.
Already on the donation thing, even before FPS existed:
http://tipit.to/
One of the major problems I still ahve with FPS is that it’s US-centric. For donations to scale like the web does, donations need to work in any currency, or at the very least the 10 biggest, most stable ones - and the payment processor must NOT convert this money (as you’ll likely be converting it back later).
@Akshay Dodeja -
First off, you’re right that ads are the the thing right now as far as most websites making money is concerned. But I think the reasons for that have more to do with cost/benefit analysis than anything else.
When we were deciding on the revenue model for our app (http://www.kayuda.com/, plug plug), we modeled out a lot of things–ads, subscriptions, donations, freemium, selling goods, etc. Ads won by a mile because Google makes them effectively zero effort to set up, zero cost to maintain, and provides highly detailed statistics for seeing how you’re doing. Most importantly, Google is *well known* for doing that, so they come to mind immediately when people are trying to figure out how to do what they love and still keep the lights on. Furthermore, the statistics are pretty good–it seems like even mediocre sites can get a 0.1% CTR, and when one ad in a thousand is paying off, it doesn’t take much traffic to generate enough revenue to live.
When the costs are essentially zero, the benefits are easy to estimate for any given level of traffic, and it’s a recurring revenue stream…it’s hard to argue in favor of doing something else.
Are you sure that “millions more people already have Amazon accounts than PayPal”?
Not that I’m a PayPal fan, I’ve been through hell & high water trying to get an affiliate ad payment from them this week. fyi: when adding a new email to an existing Paypal profile, I don’t get the link required in their confirmation msg which is needed to click back to them. Maybe it’s their problem with FF, I don’t know, but what a PITA!
If FPS micro-payments help Bezos and his Blue Origin make it to outer-space, more power to him I say.
When I read the title of this piece, concerning Amazon’s new FPS, I was very excited. Imagine my disappointment to click on this article and find out that it had nothing to do with a First Person Shooter. :(
Regarding your idea of supporting weblogs with micropayments, I wonder if your know about indieKarma (www.indiekarma.com). It’s been around for a while.
International payments in US Dollars only. Not acceptable.
The negative cachet surrounding PayPal has a basis in its popularity - where there are people, especially lots of the people and a payment system, there’s bound to be scams. I’m certain it will be no different for Google or Amazon for that matter, if they build the sort of mass that PayPal now has for online payment. To say Amazon’s implementation is better than PayPal because PayPal has had its share of troubles is true, but keep in mind that this is a limited beta from Amazon. PayPal is, well, not.
As well, your statement that millions more have Amazon accounts than PayPal may not be entirely accurate - PayPal has somewhere around 143 million, while Amazon has somewhere around 70 million.
JunglePayments.com is built on Amazon FPS and enables clickable payment links and buttons without any coding necessary, and no fees except what Amazon charges. They were already working with Amazon to test FPS for some months prior, so they were able to have a polished system ready at the same time FPS launched.
Voluntary contributions is not anti the Free Internet.
If someone wants to provide you with support great,
and if they don’t thats ok, they can still read your stuff.
I have no problem with a simple cheap efficient way to allow
anyone to get donations, tips ect. or gasp sales.
PayPal gets a lot of bad press from developers, but it’s still very popular when it’s time to make a purchase. I implemeted GoogleCheckout alongside PayPal, and 60% of my customers still choose to pay with PayPal.
I’m looking forward to offering FPS as a payment option as well.
This may be a really silly question, but I’m a newbie trying to figure out how to charge for an online service. Is is FPS hosted? I don’t want the liability associated with managing customer’s CC info, etc.
@Bill: It’s definitely hosted. Amazon gives you an API, but customers are sent back to Amazon’s site for actual payment via credit card.
so far, you limit AWS FPS to merchant-in-US-only model and USD-only model, and you dare to talk about “not ignoring”, right? you must be kidding us… with all risks bounded to USD as currency (go fix your ailing federal reserve hole in a credit system), and all rusticated US legislation limitations to play within (gambling anyone?), one must be sniffing a glue to waste time & resources on FPS… you either learn and change, or stay at your US sandbox and don’t pretend you go global… and please, don’t waste your time on excuses like “one day, maybe, but we can’t say when” - only naive college students will go along.
This looks really interesting. But as were in the UK we can’t use this yet. Does anybody know when it might be lauched to the UK market?