Amazon Payments vs Paypal

Amazon Payments is a payment gateway that is designed to be used for Amazon merchants and their customers. It is designed specifically for the Amazon shopping process and is currently offered with Shopper or Merchant packages. It is an easy way to streamline shopping while being able to customize recurring payments, along with several additional features.

PayPal is an all-around payment gateway solution. It can be used outside of Amazon or those with a PayPal account can make a payment through Amazon. Buttons can be quickly added to any website to initiate a payment. Customers don’t need a PayPal account to pay either. They can just enter their credit or debit card information and process the transaction.

At their core, Amazon Payments vs PayPal compares two very similar API-driven commerce platforms. Both integrate into existing websites, but Amazon does require a login to initiate a shopper payment. Here are some of the other key points of difference between these two platforms.

What Are the Transaction Fees?

Amazon Payments offers merchants a 2.9% domestic processing fee on all transactions. An authorization fee of $0.30 is added to the transaction. Cross-border transaction fees are 3.9%, with the same authorization fee. If a refund occurs, the transaction fees, but not the authorization fees, are refunded.

With Amazon Payments, if a merchant disputes a chargeback claim that is not covered by the company’s payment protection policy, then a fee of $20 and any tax will be assessed to the account.

PayPal charges merchants the same domestic processing fee of 2.9% and also has an authorization fee of $0.30. International sales, however, have a 4.4% transaction fee and then an authorization fee that is based on the currency received. Certain charities may qualify for the domestic rate to be lowered to 2.2%. Merchants that use the PayPal Here card reader pay a 2.7% transaction fee or a 3.5% fee with a $0.15 authorization fee for manually-entered transactions.

What About Tax or Revenue Reporting?

Amazon Payments requires all new merchant accounts to complete a tax interview. Information required during this interview includes the W-8 or W-9 form that is required from the IRS. This allows the platform to know whether or not sales from your website are subjected to 1099-K reporting requirements.


You’ll need to provide Amazon with your US tax identification number, which may be your Social Security number.

PayPal initiates this interview only if your account qualifies by receiving $20,000 in gross payments during a single tax year and more than 200 separate payments. They will request your tax identification number when it is expected for this threshold to be met.

Neither Amazon Payments nor PayPal track any sales tax or other taxes you may collect. It is a gross revenue tracking mechanism only.

Are There Maximum Spending or Minimum Balance Amounts?

Amazon Payments may require a minimum balance in a payment account. They might also require the establishment of a reserve account to ensure that payment obligations can be met. This is done because of a merchant’s low credit score, threat of anticipated chargebacks, or other concerns regarding payment obligation. This requirement may be raised, lowered, or removed at any time and without prior notice.

Amazon Payments also reserves the right to transfer funds from your current account balance to the reserve without notification. A security interest in and lien on all funds is granted to all funds held in the reserve account as well.

PayPal may also require a minimum balance in an account. They may also require the account be linked to a bank account, credit card, or some other method of funding to cover costs that might exceed the amount available. Instead of a specific reserve amount, a rolling reserve may be allowed. This releases a portion of the funds earned after a specific holding period.

Both platforms tend to remove these reserves for merchants who have an established credit history and are working in industries with low chargeback threats. Delivery timeframes, a history of returns, and a history of payment processing will also be evaluated.

PayPal also has maximum spending limits that are based on account history and funding methods that are assigned on a per-account basis.

Getting Paid with Amazon Payments vs PayPal

Amazon Payments requires merchants to set up their checking account in their account dashboard. They will not pay you until an automated clearing house (ACH)-enabled checking account is linked. You will also need to have a valid credit card for disbursements. It takes at least 14 days from new account registration to make the first funds disbursement. It may also take up to 5 business days for a posted disbursement to appear in a checking account.

PayPal also allows you to withdraw money directly into your bank account. It usually takes 1 business day if it is initiated by a specific time the day before. The account must be linked and registered to a matching name. You can also withdraw to your bank account using an eligible debit card and receive funds in as little as 30 minutes, but a $0.25 fee and currency conversion fee may be associated with the latter transfer.

PayPal will also issue you a check for your account balance if you prefer. Checks are received in 7-14 days and a $1.50 fee is applied to each check.

The easiest way to access account funds in PayPal is to use their debit MasterCard. Up to $400 in ATM withdrawals can be made every day, though local ATM fees and a $1 withdrawal fee may apply. You can also use the debit MasterCard to make business purchases you may need and qualifying purchases receive 1% cash back. Spending maximums are based on funding levels and account history.

When using the PayPal debit MasterCard, you may receive instant funds availability from your general revenues.

Amazon Payments vs PayPal: Which Is Better?

Amazon Payments allows shoppers to use a familiar login to make payments on their favorite websites. For merchants, it is an easy way to add a secure e-commerce solution to their website from a name that many of their customers already trust.

PayPal allows shoppers to pay without the need to have an account. Merchants can add buttons to their website with copy/paste ease to create an instant checkout process for their goods or services. Although the international transaction fee percentage is higher, there are also better revenue accessibility.

In a best-case scenario, you can access funds from Amazon Payments in 3 business days. For PayPal, the maximum amount of time is just 1 full business day and some methods of revenue access are instantaneous.

Both payment platforms offer merchants an easy way to get paid and offer shoppers an easy way to send a payment. Look at the structure of each platform to determine which one will best meet your needs.

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