Amazon Flexible Payment Service
Introducing Amazon Flexible Payment Service
A couple months ago the good folks at Amazon invited FreshBooks to be among their first few 3rd party integrators with Amazon Flexible Payment Service (FPS), the next leg in their amazing line up of web services. It follows smash hits like Amazon Simple Storage System (S3) and Amazon Elastic Computing Cloud (EC2). The service is not publicly available, and won’t be for several months, but we can now share with you the inside scoop and explain why FPS is an exciting platform for payment processing, and what it’s like to work with.
Over the last few weeks, Levi has been working closely with the Amazon FPS team to integrate their new payment gateway into FreshBooks. As the name suggests, FPS is very sophisticated because it is very flexible. It not only accepts multiple types of requests (SOAP and REST), but more importantly it also has unparalleled ability to control payment amounts and methods.
Finally, micropayments that work!Anyone who has ever used Amazon Web Services has noticed Amazon can bill as low as only 1 _cent_ a month. If you’ve ever been jealous they can do that and you can’t, well, now you can. With FPS, you can now bill as low as 1 cent, and Amazon will charge a transaction fee of **one quarter of one cent**. Bring back the penny candies, because this changes the game for the entire web. There may have been micropayment solutions before, but none backed by a major trustworthy player like Amazon. ### I always wanted to run my own bank Paying for each and every one cent purchase sounds like a headache for your customers. Amazon Flexible Payment System solves the problem by maintaining an _account balance_ between every two parties. Much like a bank, you can add credit and make debits to your heart’s content and Amazon keeps track of the balance owing. Your customer can buy a bag of candies one penny at a time and only whip out their credit card once. This is important and powerful. **FPS is the first payment system that separates a charge from a payment.** This makes it possible to pre-pay for services and then deduct fees over time from the balance. Think of independent digital music stores that let customers purchase, say, $10 credit to buy 100 songs for $0.10 each. Alternatively, you can accrue charges over time, and let your customers pay the balance owing all at once at the end of the month, much like your VoIP phone company charges long distance. This dramatically cuts down on credit card transaction fees. #### Unprecedented control Moreover, Amazon FPS provides a lot of control over your Amazon account transactions. For any payment, **you can specify exactly how you want to get paid**: directly out of another Amazon account, using a credit card, using a bank transfer (aka using the ACH eChecking system). Compare this to PayPal, where your buyer can use whatever method they want to pay for your product or service. If you want to cut down on credit card transaction fees, FPS can make sure your customers pay you with the lowest cost method. Of course, for FreshBooks customers, we do not force your clients to choose any one payment method since getting paid faster is usually much better than cutting down on transaction fees. ### Show me the money! The astute amongst you may have noticed that one quarter of a cent is 25% of the transaction, which can add up. Rest assured that is only the cost for transactions under $0.05. Their fees scale well:
|Transaction size||Within Amazon Payments||Bank account (ACH)||Credit card|
|>= $10||1.5% + $0.01||2.0% + $0.05||2.9% + $0.30|
|< $10||1.5% + $0.01||2.0% + $0.05||5.0% + $0.05|
|< $0.05||20%, minimum $0.0025||n/a||n/a|
- 2.5% + $0.30 per transaction for payment volume from $3K- $10K
- 2.2% + $0.30 per transaction for payment volume from $10K - $100K
- 1.9% + $0.30 per transaction for payment volume over $100K
/SampleApp/logs/AmazonFPS.log). To save you the trouble, here is a basic Amazon FPS SOAP request for the following call in PHP:
$payResponse = $SoapClient->call( 'Pay', 'UniqueMessageId'.microtime(true), $keyStoreLocation, $keyStorePsswd, $payRequest, $namespace );### The elephant in the room The question is, how does Amazon stack up against PayPal and Google Checkout. Well, you have to think about Amazon FPS as a payment service just like you think of Amazon S3 as a backup service or Amazon EC2 as a webhost. None of Amazon web services are meant to be fully packaged, ready to use systems. They are all lower-level systems. S3 is the storage for a backup system. EC2 has the raw Internet-connected machines you install the server goodies necessary for a modern webhost. Building foundation computer-sciency services is easy to understand, but how does one write a more fundamental payment service? By stripping payment down to the raw functions: credits, debits, payments, payouts, and a ledger to keep it all organized. Amazon FPS is meant for people who need more control over money flows, especially those who need the kinds of cheaper, smaller transactions in order to make their business feasible (think digital goods resellers, like digital music). In fact, you could probably build the next PayPal on top of Amazon FPS, and I have no doubt someone will try. What’s also nice is that Amazon.com, through its more famous book, music, and merchandise channels, probably has millions of average customers that PayPal and Google Checkout do not, and now those customers are only a click away from your business. This greatly expands the marketplace of people willing to use person-to-person online payments, and that can only be a good thing. #### In the meantime… So, we’re looking forward to finishing up the integration of Amazon FPS with FreshBooks shortly. It looks like it will be a great alternative to PayPal and Google Checkout once it is fully released to the general public. In the meantime, you will be to access it indirectly through the FreshBooks API.
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