Freshbooks helps Amazon take on PayPal

I know there’s been a lot of Canadian flag-waving around here, what with my recent posts on Treehugger, Club Penguin and Webkinz, but heck, if I don’t wave it, then who will? In any case, there’s some news today about another Canadian Web 2.0 success story, namely Freshbooks — which (full disclosure) is run by my friend and fellow mesh organizer Michael McDerment.

As discussed in a post over at the Amazon Web Services blog, Freshbooks is one of a handful of partners that has been testing a new service called Amazon Flexible Payment Service. Mike’s partner Sunir explains more about the details of the testing they’ve been doing in a post at the Freshbooks blog, and Amazon has more details on FPS here, and Phil Burns says he is already working on integrating it with Facebook.

cash.jpgAmazon’s payment service (which Mike Arrington broke the news of here) looks to me like something that has the potential to become a real competitor to PayPal, a service that has many great features but has also irritated many users by being, well… inflexible. And at least at first glance, the pricing for FPS looks fairly competitive with PayPal and Google Checkout. Even Uncov seems to like it 🙂 FPS joins a stable of impressive services Amazon has launched over the past year or so, including its S3 storage business and the EC2 or “elastic computing in the cloud” business — which companies can effectively use as a virtual server farm.

As the AWS blog describes it:

In much the same way that S3 and EC2 allow developers to forget about leasing space in data centers, buying servers and negotiating for bandwidth, FPS shields developers from many of the messy and complex issues which arise when dealing with money.

There are no minimum fees and no startup charges, and any transaction fees are obvious and transparent to the user, Amazon says. As James Robertson notes on his blog, Google gets a lot of attention, but Amazon continues to roll out services that are inexpensive, useful and potentially even revolutionary with very little fanfare. Congrats to Mike and his team for getting in on the ground floor of what could be another winner.

Microsoft still wants to control your wallet

So Bill Gates, musing aloud during one of the sessions at the exclusive, celebrity-studded think-tank known as Davos, says Microsoft would like to get into the micro-payments game — maybe cut MasterCard and Visa out of a little action, elbow its way into the PayPal and Google Checkout business, that kind of thing. Pretty big news, right? Sure. Except for the fact that Microsoft has wanted to accomplish said goal for about the last decade or so.

Ever use Microsoft Passport (now Windows Live ID)? You sign in once with your Hotmail name and then get access to all sorts of wonderful places on the Web… that is, provided they are controlled by Microsoft. The plan to make Passport a universal ID card as well as a payment portal never really took off. Why? Because people don’t like to play with Microsoft unless they have to, that’s why. In fact, they would apparently rather get taken to the cleaners by MasterCard and Visa.


More recently, Microsoft has been establishing a “points”-based system of payment, both for Xbox Live features and possibly to compensate people for sharing music over the Zune network (assuming anyone ever does that, of course). Although he was irritatingly vague about what the company has in mind, Mr. Gates seemed to be suggesting that this points system could become a micro-payment scheme for the Web.

Let’s be frank. This has virtually zero chance of ever becoming a reality. Don’t get me wrong — I think micro-payments are a great idea, and they would help any number of fledgling Web-based businesses make a living, up to and including blogs. But there are two problems with a Microsoft points system: The first is the word “Microsoft,” and the second is the word “points.”

Points-based systems are much like the system used at casinos, or the payment card used at some restaurants — just confusing enough that you forget how much you are really spending. And the odds of Microsoft somehow convincing thousands or tens of thousands of small retailers and businesses to sign up for a Microsoft payment system? A billion to one.

Calacanis and Denton — Envy 2.0

A couple of stories today came together in my mind as evidence of what you might call Envy 2.0. The first is the New York Times story about how the rich are envious of the super-rich. It seems that Web 1.0 success stories like Reid Hoffman of PayPal (now running LinkedIn) are envious of former colleagues Chad Hurley and Steve Chen of YouTube, who are now hundreds of times richer.

What a problem to have, right? I feel sorry for poor old Reid, as I’m sure all of you do too. The article is cited by some people as evidence of a bubble mentality, and it’s hard to argue with that perception. There’s no question that the urge to make a mark, particularly a large financial one, is part of what drives many entrepreneurs — and that’s a good thing in my mind. But when it becomes raw envy, it can make people do stupid things. Nice to see that the Hot or Not guy is trying to take a step back.


The second Envy 2.0 story is the bitch-slap going on between Jason Calacanis — until recently the head of Netscape, and former CEO of blog network Weblogs Inc. — and Nick Denton of competing blog network Gawker Media, who is writing the gossip site Valleywag after the rather sudden departure of former editor Nick Douglas. The match au pissoir got started when Nick wrote about Jason jumping ship because Netscape is cratering.

Not one to take that kind of thing lying down, Jason posted some comments on Valleywag about how Nick’s numbers were all wrong (even though he claimed to have gotten them from Omniture, which would be internal-only, and to have cross-checked them with ComScore), and then posted his own invective about Gawker and how it is getting creamed by sites like TMZ and PerezHilton. And of course Jason used Alexa traffic stats, which are widely viewed as unreliable.

Is Nick envious of Jason for selling Weblogs Inc. to AOL for $35-million $25-million? Maybe. Is Jason envious of Nick for being able to say whatever he thinks and do his own thing, instead of having sold out to The Man and then having to quit? Perhaps. Plenty of envy to go around, it seems.

eBay to Google Checkout — get lost

It appears that the gloves are off in the battle for online-payment supremacy, one which pits Google’s new payment feature Google Checkout against PayPal, owned by auction giant eBay. According to a report on Thursday, eBay has added its competitor’s service to the list of payment networks that eBay sellers are not supposed to use (a list that also includes, and

According to eBay’s “Accepted Payments Policy” the company “wants to ensure that the marketplace offers buyers an array of safe, appropriate and convenient payment choices for the marketplace. As described in our safe buying guide, eBay strongly encourages sellers to offer payments through PayPal – PayPal is not only convenient to use, but it also offers buyers and sellers industry leading protection against fraud, chargebacks and theft of financial data.”

So is adding Google Checkout to the banned services list an anti-competitive act designed to favour its own in-house solution or is eBay just looking out for its sellers? The company says in its policy that “as new payment services arise, eBay will evaluate them to determine whether they are appropriate for the marketplace. Payment services that are not permitted on eBay may, in fact, be outstanding services for consumers in other contexts. eBay’s evaluation relates only to whether a particular service is appropriate for the eBay marketplace.”

The company says that it considers a number of factors when it approves a payment scheme, including whether it offers privacy and anti-fraud systems, whether it has a track record of providing safe and reliable services, and the background of the payment service. For its part, Google said that it has “a long history in billing and payments for AdWords and for premium services, such as Google Video.” And what services does the auction giant approve of, other than PayPal? Well, there’s Bidpay, Certapay, Checkfree and, yes — Canadian Tire money, believe it or not.

Google Checkout — future of micro-payments?

It’s not the PayPal-killer that everyone was hoping it might be, but Google has launched a payment system — known as Google Checkout — that could still wind up disrupting the existing online payment game, if only because the search engine has the cash hoard to finance a prolonged battle for market share with advertisers. The service is tightly integrated with Google’s AdWords program, and will give advertisers who use it a break on their charges for the keyword advertising system.

This is a smart move, and arguably a lot smarter than launching a direct head-to-head attack on PayPal, which has a substantial market share with eBay sellers (which is what compelled the auction service to buy it in the first place). For one thing, as Forrester analyst Charlene Li notes on her blog, integrating Google Checkout and AdWords could make the advertising service that much more attractive to companies and even individuals — provided Google can show that shoppers will “convert” to being buyers at the same rate they do with existing checkout schemes.

Google CEO Eric Schmidt said the company’s intention is to make the process of buying something as fast and as painless and possible, and to a certain extent that’s what PayPal tries to do as well — it just does it mostly for auctions on eBay. But if Google can get sufficient traction from the retailers in its AdWords program, it would be relatively simple to roll the Checkout service out to just about anyone, including individual website and store operators. And the fact that Google’s fees are lower than either PayPal or Visa/MasterCard will make it that much attractive as well (more details here).

It’s not out of the realm of possibility that Google Checkout could become the fast and easy micro-payment system that many Web-heads have been anticipating for so many years. What if a website or blog network or micro-publication of some kind could sell access to stories or other merchandise, and get a deal on their ads to boot? That could be a powerful tool. Whether Google wants to go down that road — and whether consumers are willing to have Google be their online bank — is the big question.

Marshall Kirkpatrick over at TechCrunch is disappointed that it’s not a stored-value system, and wonders what’s in it for him, and Om Malik makes the point that Google’s main interest in launching Checkout isn’t to bash PayPal or even Amazon for that matter, but to enhance its advertising model by moving towards a “pay-per-action” rather than a “pay-per-click” model. Scott Karp of Publishing 2.0 (who should maybe change the name of his blog to Advertising 2.0) says Checkout is a very 1.0 shopping engine.