Amazon Purchase Stake In Bill Me Later

In a press release earlier today Amazon has annouced they have taken an equity stake in Bill Me Later. Bill Me Later has more than 3 million registered users and has partnerships with over 700 websites.

Bill Me Later is in direct competition with PayPal’s Pay Later service. The service works as follows, you register and enter your date of birth and last four digits of your social security number and it basically does a credit check on the fly and works out what risk you are worth. Bill Me Later then pays the merchant, and sends you a bill. Very simple business model that seems to be having great rewards, especially considering Bill Me Later are expected to bring in $100 million in revenues this year.

Techcrunch reports on the serious nature of the backing of Bill Me Later, it raised a huge $72 million last quarter in financing which brings the total financing to $200 million from Azure Capital Partners, Chase Paymentech, Crosspoint Venture Partners, First Data Corp.

This is a great move by Amazon to purchase a stake in Bill Me Later because this is a service that is definitely currently missing from it services. This is a very good strategic short term and medium term decision by Amazon. In the short term they received a percent of the revenue that Bill Me Later has in which is received from numerous partners such as Apple Store, Overstock, Walmart and others. While in the medium term i can see Amazon acquiring Bill Me Later because of its great potential to fit in with the Amazon structure and then Amazon can also leverage more on Bill Me Laters partners and draw even more revenues from then. But additionally i am very impressed with Bill Me Laters algorithm (which most people have been mentioning), because it does all credit risk decisions on the run in pretty much no time at all. Amazing!