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Amazon’s FPS & the micropayment revolution

Like many people I love Amazon.com, it’s an amazing business that’s revolutionised the way books are sold, and defined the e-commerce game.

But in recent years this aspect of Amazon has taken a back seat to their brilliant, although slightly-out-of-left-wing, decision to provide access to their technology backbone.

Amazon now offers a range of Web Services under the name Amazon Web Services (AWS).

The AWS family is made up a of a series of large scale, clustered networks; to quickly summarise:

• Simple Storage Service (S3): Which is a giant storage cloud – meaning there is a “place” where you can simply upload or download files, and have them stored securely. The brilliance of this service is the amazingly low cost; you simply pay for the amount of storage used and the amount of data transferred externally per month (traffic within AWS is free).This service has led to a number of online hard drive type applications, but many web sites use it for storing customer assets (photos, logos, uploaded files), and some even use it as a CDN (though I hear latency is an issue).
• Elastic Computing (E2): Similar to S3, but rather than storage you’re connecting to a large computing platform. So instead of buying storage space, you’re buying CPU cycles. I know of some local Wellington companies who use this service to host application servers where they can unit-test their code for a couple of days.If your application suddenly requires more CPU time (maybe your web site gets Slashdotted) then you can simply pay for more computing power (hence the elastic bit).
• And also things like the Mechanical Turk service (connecting you to people to solve problems), and a Message Queuing service.

All of these services are technically very impressive, but the latest service, the Flexible Payment Service (FPS), is possibly the most revolutionary.

About the Flexible Payment Service

FPS is basically all of Amazon’s IP and knowledge in regards to payment processing (money transactions, credit card processing, etc) wrapped up into one easy service.

Think of it as a PayPal killer. The service allows customers to purchase goods or services using their Amazon accounts, which means a large time saving as they won’t have to re-enter all their information on your website when they want to make a purchase… it’ll be a one-click payment.

To quote Amazon FPS’s list of features:

• Send and receive money using credit card, bank account or Amazon Payments balance transfer as payment methods.
• Create “Payment Instructions” to define conditions and constraints desired for a given transaction, and programmatically obtain payment authorizations or “tokens” that represent these Payment Instructions from customers.
• Execute one-time, multiple, or recurring payments on behalf of customers.
• Aggregate micro-transactions into a single larger transaction using Prepaid and Postpaid capabilities.
• Build payment applications where you are neither the sender nor the recipient of funds. You can build marketplace applications that enable the movement of money between two third parties.
• View account balances, transaction histories, and transaction details on the Amazon Payments web site.
• Utilize the Amazon FPS sandbox to build and test applications without using real money or incurring any transaction charges.

And of course there’s good developer support at the AWS Resouce Center, where you’ll find code samples and libraries for a number of languages (C#, Java, PHP, Ruby).

Pricing

But the pricing is the real kicker – there’s no setup costs, no minimum charges, and FPS will accept payments as small as 1 cent! (Amazon will take 1/4 of a cent as their cut).

This low barrier to entry will be what will (hopefully) drive this service forward, and I see it especially being taken up for micropayments. Developers will be able to cheaply and easily offer payment methods for their software, blogs will be able to do micropayment subscriptions or donations, pay an music artist directly for an MP3, the possibilities are huge.

For more information check out the Amazon FPS page, or Freshbook’s post (kudos for being on the bleeding edge).