Amazon Bill Me Later

Amazon (AMZN) recently announced that they will make an investment in Bill Me Later and will shortly also offer the services of Bill Me Later on the Amazon Web Site. For those of you who do not know Bill Me Later is a neat little service that allows consumers with good credit to just provide a few identifying details on themselves and then be granted charge card style credit to facilitate the purchase. Retailer gets their money so you can see why Amazon likes it a lot.

Bill Me Later is a credit card style product that caters to well placed concerns about Internet security and what can happen to you individually if some one hacks into your personal credit card.

At the present they enjoy low costs. They can only function in jurisdictions where the credit bureau structure operates at a very high level of reliability. They have arranged a billion dollar line of credit through/with Citigroup. Therefore they are capital intensive.

Amazon and other retailers are probably tired of the fees they need to pay to the credit card companies and view this as a cost control exercise. Amazons Trojan horse will be the ongoing R&D needed to keep up with the security and technology needed to run this kind of beast. If you do not believe it look at Visa and MasterCard and see what they need to keep their wheels turning properly.

The new kid with a neat slingshot has picked a small sweet spot. It remains to be seen whether Bill Me Later can grow into the long pants of an adult. It also remains to be seen whether Amazon is prepared to pay for a good pair of pants.