Amazon.com Could Start Accepting WEB ACH Payments This Month

Internet retailing giant Amazon.com Inc. will likely begin accepting payments cleared through the automated clearing house from at least a portion of its customer base, possibly by the end of this month, says a source familiar with the matter. This source, who asked to remain anonymous, says the move would involve acceptance of payments through the ACH's WEB e-check application, which allows online merchants to initiate electronic debits from customers' checking accounts. The adoption of ACH has an approximately 70% chance of going forward, the source estimates. Amazon did not return repeated calls from Digital Transactions News seeking comment. Because of the size of Amazon's customer base, its adoption of ACH payments could represent a major boost in volume for WEB, which has been a fast-growing e-check category for the ACH but has been largely confined to online billers. “Given the number of payments [at Amazon], even a tiny shift to e-check would be a huge amount,” says Larry De Palma, principal at The De Palma Group, a Hudson, N.H.-based electronic-payments consultancy. WEB volume amounted to 236 million transactions in the second quarter, up 38% over the year-ago period, according to NACHA, the Herndon, Va.-based rules-setting organization for the ACH. Amazon, which like most Web-based merchants currently accepts payment primarily via credit card, will start taking ACH transactions from customers of its Amazon Marketplace service, which allows individuals to sell used items through Amazon, the sources says. The merchant may then roll the payment channel out to other customers, the source says, depending on its experience with volumes and fraud. Marketplace customers present less risk for Amazon, since they give some personal and bank-account information to the merchant when they enroll in the service. Marketplace customers, for example, set up a user name and password, give a phone number, and list a “nickname” for online use. The bank-account data allows Amazon to deposit funds in sellers' accounts when buyers purchase their goods. With WEB, these sellers could then use the same account data to buy from Amazon. The established information on these customers could be key to Amazon's decision to introduce ACH payments, sources say. A frequent merchant complaint about WEB is that while it offers a convenient alternative payment channel?and one that's less costly than cards?it is subject to a higher risk of fraud because it lacks automated authentication, or a way of making sure buyers are who they say they are. For this reason, the application has been adopted mainly by utility companies and other billers that have established account files on customers.