With PayPal Down, Amazon Should Pounce
by
on September 02, 2007,
PayPal has been down for two days. TWO DAYS. The PayPal development blog gives Wednesday or THURSDAY as an estimate of when the service might be back to functioning normally: an estimate of 6 or 7 days without service, which includes bringing subscription payments to a halt, actually, a good percentage of payment transactions to a halt.
I'm sure that after such an extended outage, developers are quickly going to be looking for alternate payment methods. Having put their eggs in one basket with PayPal for so long, it must be a very sudden shock to go without payment for a week, especially when you consider that many companies have billing cycles that complete at month-end.
This is a great opportunity for Amazon to really step up their promotion of their Amazon Flexible Payments Service, a payment service already being employed by several Web 2.0 companies, including Digital Bucket and File123, JungleDisk, Freshbooks, Buxfer, and Beetlabs. With a flexible API linked up to Amazon's own payment system, it may make more sense for developers to set up their own subscription linked in to this system, rather than relying on a service like PayPal to run the subscriptions for them. I'm already a JungleDisk user, and the Amazon system is smoothly integrated.
This is the perfect time for Amazon to step it up with their beta program and use this as an opportunity to take a good chunk of PayPal's business. Hopefully, we'll see some movement on this after the U.S. holiday weekend.
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Michael Fidler 
It may be a little early for Amazon to open this too widely… It’s worse to rush to market and have the growing pains show up too noticeably to a wide audience. I definitely think Paypal’s problems are going to make some business customers rethink how they’re handling payments and look at options though. Any change over like this in those systems is likely to take 3-6 months anyway, so perhaps Amazon has a window of opportunity.
I find it highly doubtful that Amazon would have a problem with scalability on their end. Even if they lure a few more developers into their open-to-all sandbox, they’ll have their foot in the door for way more business if they promote it right NOW while folks are still smarting. As you said, it takes time to turn the Titanic, but why not at least point out the idea when the iceberg is right in front of the boat?