As Amazon Pay now offers Citi Flex Pay, will it help Amazon close the gap with PayPal?

  • Amazon has partnered with Citi Flex Pay to offer eligible card members the ability to pay over time at merchants who accept Amazon Pay.
  • Will gaining access to Citi's card network enable Amazon Pay to gain an edge over competitors like PayPal?

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As Amazon Pay now offers Citi Flex Pay, will it help Amazon close the gap with PayPal?

Last week Amazon announced a partnership with Citi Flex Pay for its digital wallet. Now eligible Citi card members can choose to pay over time during checkouts at ecommerce stores which offer Amazon Pay.

How does the Amazon Pay and Citi Flex Pay partnership work?

For purchases of $50 or more, Citi card holders can split their payments made through Amazon Pay into equal monthly installments for up to 48 months. For the time being, customers can utilize the promotional 0% APR while dividing payments into three monthly installments on purchases of $50. A similar 0% APR is available for orders of $149 or more with the option to divide payments into equal installments for 6 months. For those making purchases of over $299, the 0% promotional APR applies for 12 months. The promotional offer expires on July 31st.  

The Citi Flex Pay option is not available at Whole Foods Market, Amazon Fresh or for grocery delivery and Amazon’s Subscribe and Save. 

Why does it matter?

For one, this is the first time Citi’s Flex Pay is available through a digital wallet. Sources report that Amazon Pay is offered at 37,639 e-commerce websites in America. Although Amazon’s position in payments has been steadily cementing over the past few years, it has not yet won out over its competitors like PayPal. 

Bar graphs showing how many merchants with atleast one payment method use Amazon Pay or PayPal.
PayPal is edging out by a strong margin across all depicted regions namely US, Germany, UK.
Source: Statista Amazon Pay data, Statista PayPal data

Gaining access to Citi’s 78.7 million cards in circulation provides an opportunity to expand Amazon wallet’s capabilities. 

It helps that merchants who are using the latest version of Amazon Pay are automatically enrolled into the Citi Flex Pay feature and don’t have to pay additional fees to enroll. These provisions remove any friction or reservations that merchants may have in adopting the pay over time feature. 

Tearsheet's take

Will this move allow Amazon to gain an edge over its competitors? It's possible. However, long standing payments providers like PayPal have been able to establish themselves with merchants because trust is not an issue. Merchants are not wary of the possibility that PayPal would steal their business or gain an edge by having custody of important payments data. 

The same is not true for Amazon. In fact, some suggest that PayPal’s separation from its ecommerce platform eBay is what allowed the firm to spread its wings when it comes to merchant acquisition. Given Amazon’s history of competitiveness, the fear of losing your business to the e-commerce giant is very real. And it is unlikely that introducing any particular payment option will curb that anxiety. 

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