Amazon Pay’s Faster Merchant Payouts Moves 2-Sided Network Into Open Ecosystem

The two-sided network is a simple concept where buyers and sellers come together.

Amazon’s moves in recent days spotlight the eCommerce juggernaut’s ambitions to expand its network for merchants, in effect giving rise to what might be considered an open ecosystem beyond simply matching consumers and businesses.

PayPal’s been a bit of a harbinger here, where the platform, with insight into each side of the commerce equation, has also pushed into invoicing and business loans (via PayPal Working Capital).

Tuesday (March 22), Amazon laid more bricks in its mosaic to serve as a one-stop shop for those merchants to access a broadening customer base (those using Amazon Pay), the capital they need to keep operations humming and the logistics that are necessary to get goods from point A to point B.

As announced this week, the company has announced Express Payout for Amazon Pay, with merchants getting paid more quickly, sidestepping the traditional three to five days it takes funds to settle via ACH transfers. Regarding the mechanics of Express Payout, merchants can receive deposits of up to $1 million within 24 hours.

Forging an Ecosystem and Maybe a Super App

As to the ecosystem being forged, with Amazon Pay as the nexus, Amazon has noted that Pay is integrated with a network of financial institutions (FIs) to help enable those payouts.

For Amazon, there’s a cross-pollination effect: conceivably, Express Payouts can become a point of leverage to incentivize sellers to become Amazon Pay merchants. And as these merchants add Amazon Pay to their online stores, there’s at least the chance to jockey for a share of consumer mind and wallet share against the likes of PayPal.   

We’ve spotlighted in the recent past how offering a single point of access — it may not be too farfetched to call the open ecosystem a super app for businesses operating off the Amazon platform — for a variety of functions can be of significant value for merchants.  

Fulfillment-as-a-service is another side of the ecosystem, where Amazon has doubled its fulfillment footprint over a couple of years. 

Express Payout now takes its place alongside Buy With Prime, enables Amazon’s payments and fulfillment services at checkout. Third-party seller services sales came to $36 billion in Amazon’s latest quarter, up 24% year over year, so boosting the services on offer to the merchant side of the two-sided network is a significant opportunity.

All the while, on the other side of the network — the consumer side — Amazon also seeks to broaden its presence in everyday spending beyond the confines of the platform or solely online channels. The installed base is there: PYMNTS has estimated that the share of consumers with access to Amazon Prime (which is a natural conduit to using Pay and other services) has topped 70%, at more than 182 million subscriptions — and that’s just in the U.S, with particularly high penetration among consumers earning more than $100,000 annually (a staggering 82% of that cohort as of the end of last year).

The physical, in-store efforts are a work in progress. But as has just been reported, Panera Bread’s been testing Amazon’s palm-scanning technology, Amazon One, to pay for orders.

The two-sided network, then, evolves according to the different needs of buyers and sellers, and for Amazon, payments and payouts seed the growth.

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