When Google autocompletes search queries about retail brands, it offers a glimpse of what most confounds customers. This new feature looks for answers.
In 2000, before Elon Musk and Peter Thiel became known for flummoxing media consumers, they co-founded a payments company that aimed to be such a friend to consumers that they put “pal” in its name.
Today, PayPal—which reports serving more than 430 million account holders and merchants in more than 200 markets—has become synonymous with e-commerce. And yet, the biggest retailer in the world, Amazon, doesn’t accept PayPal.
Amazon states on its website that PayPal is among a list of payments it does not accept, a list that also includes checks, cash, and EBT cash benefits.
But consumers aren’t primarily googling to ask if Amazon takes PayPal; they’re googling to ask why it doesn’t.
SorryPal: A member of Amazon’s press team, Deniz Sonmez, responded with a statement that gave no clear answer to our question.
“Our goal is to meet the needs and preferences of every Amazon customer,” the statement, which made no mention of PayPal, read in part. “We’re always listening to customer feedback to improve our shopping experience—and that includes the payment methods we accept in our stores.”
Asked again to explain why Amazon does not accept PayPal in a follow-up email and phone call, Sonmez declined to elaborate.
PayPal, similarly, declined to respond directly to the question of why it’s not accepted at Amazon but did note that the PayPal debit card and cashback Mastercard can be used as a workaround. (More on this below.)
Amazoff: There are two popular theories—cited, among other places, by Insider—about why PayPal is not a payment option on Amazon.
- From 2002 to 2015, PayPal was owned outright by Amazon rival eBay, and both eBay and Amazon may have been disinclined to partner with a competitor.
- Amazon has its own third-party payment method, Amazon Pay, which could be considered a direct competitor to PayPal.
But Hemal Nagarsheth, a partner in the financial services practice of global strategy and management consulting firm Kearney, questioned the notion of Amazon being unwilling to work with eBay out of some competitive animus.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
Nagarsheth noted that PayPal typically requires leaving an e-commerce site briefly to authorize the payment on PayPal’s site and then returning to complete the purchase. That, he told us, could run counter to Amazon’s “frictionless checkout” approach.
“A lot of this goes back to, ‘Okay, how do we cut the number of steps that go from you adding something into your virtual basket to you completing a transaction?’” Nagarsheth said. “And every time we add a step, we need to pause and say, ‘Is this a good step or a bad step?’”
Amazon “invented one-click” checkout, Nagarsheth added. “They have a patent on it, pretty famously.” (The patent expired in 2017.)
PayPalling around: What Amazon shoppers googling about using PayPal are apt to discover are workarounds where they can use PayPal for Amazon purchases.
- PayPal can be used to buy Amazon gift cards.
- As noted above, the PayPal debit card and cashback Mastercard, which account holders can request, can be used like a credit card on Amazon.
Paying it forward: While there’s been a gulf between Amazon and PayPal historically, these days, there’s a bridge, too. Beginning on Black Friday (November 25), Amazon began accepting payments through Venmo, which is owned by PayPal, for all US users.
PayPal split from eBay in 2015, but through 2020, it was bound by an operating agreement with eBay that discouraged it from engaging with some eBay competitors. Those competitors were not disclosed, but Ina Steiner of EcommerceBytes wrote in 2018 that there was “no doubt” Amazon was among them.
On an earnings call in 2021 announcing the Venmo integration with Amazon, PayPal CEO Dan Schulman said it marked “the beginning of an exciting journey with Amazon now that we are no longer constrained by the contractual obligations of the eBay operating agreement.”
But when Colin Sebastian, a senior analyst at Baird, asked during that earnings call whether there were “opportunities to expand the [Amazon] relationship to other PayPal brands and services,” Schulman was optimistic but noncommittal.
“It is the beginning of a journey of our two companies teaming together,” Schulman said. “I wouldn’t venture at this moment as to where we’ll go together.”