Protocol | Fintech

Amazon wants a crypto play. Its history in payments is not encouraging.

It missed chances to be PayPal, Square and Stripe — so is this its chance to miss being Coinbase, too?

Amazon logo over bitcoin logo

Amazon wants to be a crypto player.

Image: NurPhoto/Getty Images

The news that Amazon was hiring a lead for a new digital currency and blockchain initiative sent the price of bitcoin soaring. But there's another way to look at the news that's less bullish on bitcoin and bearish on Amazon: 13 years after Satoshi Nakamoto's whitepaper appeared on the internet, Amazon is just discovering cryptocurrency?

That may be a bit unkind, but the truth is sometimes unkind. And the reality is that Amazon has a long history of stumbles and missed opportunities in payments, which goes back more than two decades to the company's purchase of internet payments startup Accept.com.

It's hard to remember how crude payments were in those days. Early Amazon employee Shel Kaphan recalled for Forbes how the website let customers who were afraid of inputting a full credit-card number online could phone or fax in the digits, which he or Jeff Bezos or another employee would match up with their order.

It worked well enough, but it wasn't designed for third-party sellers. Amazon had eBay in its sights, so it snapped up Accept.com for $175 million, even as eBay had been courting the startup. Amazon zShops launched a few months later. It was mostly a flop, but it laid the groundwork for Amazon's third-party seller marketplace.

The problem was that Accept.com got swept up into the bowels of Amazon's infrastructure. The service its founders had envisioned — pay anyone, for anything, anywhere online — fell by the wayside. Meanwhile, Elon Musk, Peter Thiel and Max Levchin were working on their payments startups, which would soon merge to become PayPal and leverage eBay's auctions to become the first real fintech giant. EBay bought PayPal in 2002 for $1.5 billion.

Amazon had plenty of its own payments problems to solve, like fraud. An Accept.com employee, Jaya Kolhatkar, took charge of that effort, and got Amazon's fraud rate down to a reasonable level. And its 1-Click payments was a genuine innovation. But all that payments wizardry — including the boost it got from Accept.com — remained captive inside Amazon for years. It wasn't until 2013 that Amazon created a "Pay With Amazon" button for non-Amazon storefronts — the innovation that catapulted PayPal to internet ubiquity in 1999. Amazon Pay is still struggling for market share.

The pattern repeated in mobile payments. Amazon bought technology and hired a team from GoPago, the maker of a point-of-sale system that was challenging Square's iPad-based system for space on cafe counters, in 2013. Blink and you may have missed Amazon Local Register, which launched in 2014 and shuttered a year later. Amazon's person-to-person payment system, WebPay, had almost as short a life.

In the business of back-end payments — the domain of Stripe and PayPal's Braintree — Amazon has also seen reversals. Kickstarter, a marquee customer for Amazon Payments, dropped it in 2015 in favor of Stripe after Amazon discontinued its Flexible Payments Service.

Amazon could have been PayPal, Square or Stripe. But its payments services didn't become any of those things. (An Amazon spokesperson did not respond to a request for comment on its payments efforts.)

Here's a counter-argument to all of this: Adding Accept.com to Amazon was a huge win, even if it never became PayPal, because Amazon now handles a gigantic volume of payments, and even slight improvements add up. Adding anything to Amazon makes it big, because Amazon is big.

That worked as Amazon went from books to music to electronics. But payments isn't a line of business: It's a complex, interconnected web of services that all have to work together, and it's crucial to other functions like security, customer support and marketing. One of the hardest things for Amazon is convincing other retailers that it won't screw them over, which is why Microsoft Azure and Google Cloud are actively wooing internet sellers, and why PayPal has thrived since it split off from eBay.

So now Amazon wants to hire someone to lead its crypto efforts. It sounds like a fun job, and a good way to learn a lot. Accept.com alumni have done well: Kolhatkar is now the executive vice president for data in Disney's direct-to-consumer business, and co-founders Erich Ringewald and Mark Britto are in top roles at PayPal. If the past is prologue, look for Amazon's crypto payments chief to be changing the world of commerce … somewhere else, after they leave.

Protocol | Policy

Why Twitch’s 'hate raid' lawsuit isn’t just about Twitch

When is it OK for tech companies to unmask their anonymous users? And when should a violation of terms of service get someone sued?

The case Twitch is bringing against two hate raiders is hardly black and white.

Photo: Caspar Camille Rubin/Unsplash

It isn't hard to figure out who the bad guys are in Twitch's latest lawsuit against two of its users. On one side are two anonymous "hate raiders" who have been allegedly bombarding the gaming platform with abhorrent attacks on Black and LGBTQ+ users, using armies of bots to do it. On the other side is Twitch, a company that, for all the lumps it's taken for ignoring harassment on its platform, is finally standing up to protect its users against persistent violators whom it's been unable to stop any other way.

But the case Twitch is bringing against these hate raiders is hardly black and white. For starters, the plaintiff here isn't an aggrieved user suing another user for defamation on the platform. The plaintiff is the platform itself. Complicating matters more is the fact that, according to a spokesperson, at least part of Twitch's goal in the case is to "shed light on the identity of the individuals behind these attacks," raising complicated questions about when tech companies should be able to use the courts to unmask their own anonymous users and, just as critically, when they should be able to actually sue them for violating their speech policies.

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Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

While it's easy to get lost in the operational and technical side of a transaction, it's important to remember the third component of a payment. That is, the human behind the screen.

Over the last two years, many retailers have seen the benefit of investing in new, flexible payments. Ones that reflect the changing lifestyles of younger spenders, who are increasingly holding onto their cash — despite reports to the contrary. This means it's more important than ever for merchants to take note of the latest payment innovations so they can tap into the savings of the COVID-19 generation.

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Antoine Nougue,Checkout.com

Antoine Nougue is Head of Europe at Checkout.com. He works with ambitious enterprise businesses to help them scale and grow their operations through payment processing services. He is responsible for leading the European sales, customer success, engineering & implementation teams and is based out of London, U.K.

Protocol | Fintech

When COVID rocked the insurance market, this startup saw opportunity

Ethos has outraised and outmarketed the competition in selling life insurance directly online — but there's still an $887 billion industry to transform.

Life insurance has been slow to change.

Image: courtneyk/Getty Images

Peter Colis cited a striking statistic that he said led him to launch a life insurance startup: One in twenty children will lose a parent before they turn 15.

"No one ever thinks that will happen to them, but that's the statistics," the co-CEO and co-founder of Ethos told Protocol. "If it's a breadwinning parent, the majority of those families will go bankrupt immediately, within three months. Life insurance elegantly solves this problem."

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

Protocol | Workplace

Remote work is here to stay. Here are the cybersecurity risks.

Phishing and ransomware are on the rise. Is your remote workforce prepared?

Before your company institutes work-from-home-forever plans, you need to ensure that your workforce is prepared to face the cybersecurity implications of long-term remote work.

Photo: Stefan Wermuth/Bloomberg via Getty Images

The delta variant continues to dash or delay return-to-work plans, but before your company institutes work-from-home-forever plans, you need to ensure that your workforce is prepared to face the cybersecurity implications of long-term remote work.

So far in 2021, CrowdStrike has already observed over 1,400 "big game hunting" ransomware incidents and $180 million in ransom demands averaging over $5 million each. That's due in part to the "expanded attack surface that work-from-home creates," according to CTO Michael Sentonas.

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Michelle Ma
Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Protocol | Enterprise

How GitHub COO Erica Brescia runs the coding gold mines

GitHub sits at the center of the world's software-development activity, which makes the Microsoft-owned code repository a major target for hackers and a trend-setter in open source software.

GitHub COO Erica Brescia

Photo: GitHub

An astonishing amount of the code that runs the world's software spends at least part of its life in GitHub. COO Erica Brescia is responsible for making sure that's not a disaster in the making.

Brescia joined GitHub after selling Bitnami, the open-source software deployment tool she co-founded, to VMware in 2019. She's responsible for all operational aspects of GitHub, which was acquired by Microsoft in 2018 for $7.5 billion in one of its largest deals to date.

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Tom Krazit

Tom Krazit ( @tomkrazit) is Protocol's enterprise editor, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire, and served as executive editor of Gigaom and Structure.

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