Amazon releases 'login and pay with Amazon' — can you feel PayPal sweating?

Amazon released a “login and pay with Amazon” service today that you can use to pay for online goods and services using your Amazon account information.

Amazon has 215 million active customer accounts. Online retailers can now invite those customers to pay with their Amazon credentials, rather than entering it anew.

Issues with payments is one of the major barriers to e-commerce. Fifty percent of buyers want to create accounts while shopping to save purchase preferences, but it annoys 86 percent to repeatedly enter their information.

Lengthy checkout processes result in fewer conversions and dropped shopping carts, and Javelin Strategy and Research firm found that customers are increasingly choosing to shop on sites with easier online payment systems.

PayPal has long been the dominant player in Web payments. Amazon, another giant in the realm of “buying stuff online,” is one of the few (if the only) companies that could carve out a business here.

Amazon sells more stuff online than its 12 biggest competitors combined, and a significant amount of growth within e-commerce spending is driven by Amazon. It did $61 billion in sales in 2012.

Furthermore, PayPal has a bad rep when it comes to customer service and charging merchants and customers. Real competition could perhaps force a little more friendliness, and Amazon is known for cutting out unnecessary fees to undercut the competition.

Now with sites that have “Login and Pay with Amazon,” recognized customers won’t have to deal with registering and can be manage and track orders, see their purchase history, access discounts, and quickly pull up their shipping and billing addresses.

Of course, if you wanted, you can still enter your credit card information or pay with PayPal. If you wanted.

Easy checkout is increasingly important now that mobile commerce is on the rise. Payment friction is even more pronounced on mobile devices and minimizing clicks is important for any business that hopes to sell anything online.

Through a “set of widgets and APIs,” these businesses can get the service up and running through Amazon. Hundreds of brands across the wide range of industries are already signed up. This could also represent a threat to third-party payment providers like Stripe and Square.

Amazon and PayPal are both rapidly churning out new products and services. PayPal recently spent $800 million to buy backend payment company Braintree in an effort to improve its developer platform. 

“The consumer side and the merchant side have to come together for the next generation of e-commerce,” Braintree CEO Bill Ready told VentureBeat. “Payments will become a network effect play about who can make it easiest for merchants and consumers to connect with one another with context-driven experiences. To do that, you need to have thousands of merchants and millions of consumers.”

Amazon has all of those things. It is also plugging away at other areas of the business, including Amazon Web Services, the Kindle Fire, original television programming, and maybe even a Kindle TV. Meanwhile PayPal is making a push into offline retail with point-of-sale and beacon systems.

Both within e-commerce and without, Amazon is trying to get involved in everything.