alarm:clock

eCommerce - Tuesday, December 11, 2007

Amazon Saddles Up To Bill Me Later

Headquarters for alarm:clock is under-going another round of upgrades. We shopped around to several hardware stores and prefer giving our business to ABHD (anyone but HomeDepot). But the despot that is HomeDepot makes it too hard to buy elsewhere by giving us a bill me later option. Buy now and pay in a year is too sweet to pass.

Consumers love to be billed later and that's why Maryland-based Bill Me Later has been a rocket ship. Bill Me Later makes it possible for users to defer payment on items without using their credit or debit cards. The service sends a bill to customers who can choose to pay in full without interest or fees, or go to a payment plan.

Amazon says it is going to offer Bill Me Later's non-credit card payment service as an option to shoppers. Moreover, Amazon says it has invested an undisclosed amount in Bill Me Later. Amazon is a bit late to the party as many other online retailers including Buy.com, Zappos, and Brookstone have been using Bill Me Later.

We came across some forecasts from Javelin Strategy and Research that show that credit and debit cards account for most of the $150B spent with online retailers but they predict that payment services like Bill Me Later will account for 14% of dollars spent online this year and that will shoot up to 30% by 2012.

Bill Me Later is certainly benefiting. It was named the 6th fastest-growing company in the US by Inc. Magazine, with more than $50M in revenue in 2006. If you think that this might be another operation to trap people who are buying more than they can afford you might be wrong. Bill Me Later targets high-income, credit-worthy customers who are made nervous about entering credit card numbers online. There's also something in it for merchants given that Bill Me Later charges retailers an average of 1.5% of transactions, compared to over 2% for other credit cards. So it's a bit of a surprise that it took Amazon so long to come around to Bill Me Later.

Here's the pitch

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