Today, Amazon announced an interesting development/feature with their payments offering (and of course it works on Amazon.com) called PayPhrase. You can read the details here.
Essentially an Amazon customer creates a PayPhrase which is a combination of a PIN and a > 2 word phrase to bypass the Amazon sign-in process (usually your email and password). For sites that take Amazon Payments (or Checkout By Amazon - CBA as we say in the biz), your PayPhrase/PIN can get you to an express checkout also without logging in.
One interesting side feature of PayPhrase is that you can create sub-PayPhrases that you dish out to your teens with budgets attached so you can give the give kids the ability to use your Amazon account without seeing your CC information AND you get to monitor/manage their spending. Here's the blurb on that part of the program: (click to enlarge).
It's important to note that PayPal just weeks ago announced their Student Account program - more on that later.
Finally you can setup different PayPhrases for different situations. Let's say you want to pay with your Amex and have thing shipped to work - you could use PhraseX. You can create PhraseY that is a Visa to home, etc. This seems pretty cumbersome to me personally - I can barely remember my password let alone 4+ payphrase/PIN combos and what each meant when I set it up.
Let's look at the workflow and then think about the effectiveness of this new program.
PayPhrase Workflow
There are two parts to the workflow: 1) setup and 2) consumer facing -amazon.com/network partner. Note that in each of these screen shots the blacked-out areas are to protect personal information. Large red arrows have been added for emphasis in some places.
In the setup phase, you enter your desired PayPhrase and Amazon tells you if it is taken or not. It also makes recommendations.
Once you have chosen your PayPhrase, you enter a 4 digit PIN that is married to that PayPhrase and the combination of the two is how you will now buy on Amazon. Also there are payment/ship to/bill to and other settings associated with each PayPhrase/PIN combo.
Once configured now when we are Amazon we are given two choices - the Standard buy box Add to cart and the new "Express Checkout with PayPhrase" button. that you see highlighted below (click to enlarge)
When you hit the "Express Checkout with PayPhrase" button, a pop-up is presented which asks you for your pin and also reminds you of some of your settings (ship to, the card this is associated with, etc.). Once you enter your PIN, you are essentially done with your order.
Here we are on jr.com with a camera in the cart. The Amazon Payment system knows I am PayPhrase enabled (cookie?) and then gives me two options that you can see below - Continue Checkout or "PayPhrase Express Checkout". From there the experience is as if you were on Amazon.
PayPhrase effectiveness
I signed up for PayPhrase and have used it a couple of times and have to be honest that I'll probably turn it off. It doesn't seem to really replace that many steps and to me (login, bill to/ship to/payment choices) and feels like it actually is adding a step in there (phrase THEN PIN). Also, my browser is well trained with my Amazon information and thus pre-fills that for me, even when I buy on other sites using Amazon Payments. So PayPhrase makes me type more, AND adds a step. I get that it's more secure than allowing my browser to store the pwd and more secure because the phrase isn't as guessable as email/pwd combos, but the increased security probably isn't worth the new
All that being said the teen empowerment thing is kind of interesting and a clever way for Amazon to tackle the sub-account challenge. For teens, I think the Paypal option is better at this stage of the game (the debit card is a huge win), but it's interesting to see Amazon come out with a counter offering so fast - it points out to me they are pretty darn serious about this Payments war and aren't going to get left in the dust (unlike some of the other players that had some momentum and then took their foot off the pedal - say a search company we all know and love.)
Conclusion
Overall PayPhrase is a feature we'll keep an eye on, and heck maybe I'm missing something (if you love PayPhrase, let me know why in comments), but for now it feels like it adds complexity vs. eliminating it. One macro positive not to be lost in this small feature discussion is that Amazon Payments seems to have added J+R which is one of the top electronics retailers (full disclosure they are a ChannelAdvisor customer). If you look at the implementation the Amazon option sits above PayPal and then Google Checkout is now at the bottom of the payments ladder there.
SeekingAlpha Disclosure - I am long Amazon and Google. eBay is an investor in ChannelAdvisor where I am CEO. J+R is a ChannelAdvisor customer.
