Amazon Pay Review: How It Works, Fees, Alternatives - NerdWallet (2024)

Amazon Pay is an online payment processing service that lets Amazon customers use their account information to make purchases on other e-commerce websites. Shopify, BigCommerce, Adobe Commerce (formerly Magento) and numerous other e-commerce providers integrate with Amazon Pay, and it also allows customers to make payments using Alexa-powered devices.

Amazon Pay is best for businesses that are primarily focused on online sales. If you need support for a wider range of payment methods or want to accept in-person and keyed transactions, consider competitors such as Square, Stripe or PayPal.

Amazon Pay for merchants

To add Amazon Pay to your website, you’ll need to have an Amazon Seller account and embed a plug-in or code on your e-commerce platform. You can find links to setup materials for more than 20 partner e-commerce platforms on Amazon’s website.

In general, follow these steps to get started:

Amazon Pay processes payouts daily, but it will take three to five days for funds to show up in your bank account. There's also a one-time three-day payment hold before disbursem*nt following a change in bank account information.

Some of your payments may also be subject to Amazon Pay’s reserve policy. For new sellers, the payment service reserves all payments for seven days after the transaction. After using the platform for at least six months, you're eligible for a less restrictive “reserve tier.”

Here's an Amazon-created tutorial about how to register for an Amazon Pay merchant account, which may provide a helpful look at the interface and process.

Amazon Pay for customers

When customers check out, they can use the Amazon Pay button to securely populate the address and payment information from their Amazon account. Businesses can also build and offer an Alexa skill to start accepting Amazon Pay voice orders from customers with Alexa devices.

Amazon Pay charges merchants per transaction in the U.S. There are no setup fees, monthly fees, annual fees, termination fees or hardware items to purchase.

If you process a refund, Amazon Pay refunds your percentage-based transaction fee, but keeps the 30-cent authorization fee. It charges $20 (plus tax) if you dispute a chargeback claim.

Amazon’s global reach

Amazon is one of the world's most valuable brands, according to brand consulting company Kantar's BrandZ rankings, and has over 200 million Prime members globally. Many of your customers will already have an Amazon account, so enabling Amazon Pay allows them to check out in fewer steps. Even those that don’t will likely recognize and trust the Amazon name, which could increase conversions.

Amazon purchase guarantee

Customers can be confident that their payment details are secure and any issues with their purchases through non-Amazon merchants will be resolved with the Amazon Pay A-to-z Guarantee. Customer refunds are provided when packages are late, damaged or not delivered. It also covers customers who don’t receive a refund or are charged more than they authorized.

Reserve policies can delay payouts

For new users, Amazon reserves 100% of funds for seven days to hedge against disputed transactions. Sellers can graduate to a less restrictive “reserve tier” by completing at least 100 orders and maintaining an order defect rate below 1%. The order defect rate is calculated over a 60-day period and includes the percentage of orders that had negative feedback, A-to-z Guarantee claims (refunds) and credit card chargebacks.

Cost and integration limitations

Amazon Pay doesn't offer volume discounts. If you sell at high volumes with relatively low margins, you might be better served by a competitor like Stripe that offers volume-based pricing. In addition, Amazon Pay doesn’t partner with some major e-commerce platforms that offer their own competing payment services, such as Squarespace, Square Online and Wix.

Authorize.net

Payment processing:

Why we like it: Authorize.net offers both an all-in-one plan similar to Amazon Pay that includes a merchant account, and a "payment gateway only" plan, which provides you with a portal for accepting payments online. You can take payments through your website, over the phone and in-store and accept Visa, Mastercard, Discover, American Express and JCB as well as PayPal, Apple Pay and eCheck. Authorize.net will accept customers worldwide as long as your business is based in the U.S., Canada, United Kingdom, Europe or Australia.

Stripe

Payment processing:

Why we like it: Stripe is an all-in-one payment processing system that supports a wide range of global payment methods for both online and in-person payments. It offers a large variety of customization options that allow you to set up your checkout process exactly the way you want it, as long as you have the technical know-how to make it work. Stripe also offers digital wallet payment options, along with ACH, in-person payments through Stripe Terminal and several “buy now, pay later” options. The platform has customized pricing packages "for businesses with large payments volume, high-value transactions or unique business models," according to the website.

PayPal Zettle

Payment processing:

Why we like it: PayPal has product offerings for just about any kind of payment you might want to accept, including some that Amazon Pay doesn't support. For example, PayPal supports Venmo (a PayPal subsidiary), its Zettle point-of-sale system and QR codes. PayPal also offers easy integration with many e-commerce platforms. If you use a platform that Amazon Pay doesn't support, like Squarespace, Wix or Square Online, it could be worth looking into PayPal payment integration instead. If you're only looking to accept online payments, though, Amazon Pay might offer a better deal because its per-transaction fees may be lower than PayPal’s, depending on the payment type.