Amazon has today launched a new service to rival Paypal, called Login & Pay With Amazon, maybe not the snappiest name they could have chosen, but a fundamental game changer nonetheless. The idea is to let people pay for their online shopping *on any store* using their existing Amazon account. The idea is simple and logical, and yet so much more than the sum of its parts.

The key to this brilliant strategic move by Jeff Bezos is the fact that Amazon has a customer base of nearly a quarter of a billion users worldwide (c 215 million), most of whom are fanatic supporters of everything that the company provides to its customers as a matter of course. What does that mean?

Well for one thing Amazon purchasers know just how much customer service means to the company, both in terms of making sure their purchases are protected from fraud or incompetent service by sellers, and also with regard to after sales support, where the company will typically step in to ensure the buyer is treated properly in any dispute. As a long time Amazon customer I now take it for granted, and probably like most users, will buy from Amazon in preference to other retailers if at all possible.

Let me repeat that. I will buy from Amazon *over and above* other retailers if at all possible, even if the price is slightly higher or the delivery not as good from Amazon. Why? Because I know that:

1. I can rely on Amazon to protect me if anything goes wrong in the sale or after sale process.

2. I have experienced incredibly efficient customer service from Amazon in the past, consistently.

3. I know that my Account/Order history is an awesome resource for managing my purchases, re-purchases, guarantee details and other vital parts of being a consumer today.

4. The physical Amazon purchase process is without question the easiest and most efficient process there is anywhere on or offline. Even without One-Click convenience, the fact that payment and delivery options are automatically applied makes the process silky smooth.

So the end result is Amazon gets my business whenever I get the chance. The only exception to this rule is the fact that I prefer to support small local suppliers as much as possible, and so I will physically travel (gasp!) to a local shop to buy something from a retailer I like, rather than save some money buying on Amazon.

So what has this to do with the new Login And Pay With Amazon service?

Simple. Imagine that these features are now available to me on a huge range of online stores and services, via phone, mobile and desktop computer. So even though you’ve just bought a pair of shoes from a tiny online boutique store in the back of beyond, you can rely on exemplary customer service, a superb returns system and everything else that comes with the Amazon story.

I also won’t have to dig around to re-enter my credit card details (extra protection on foreign websites I don’t know!) or address details, no more signing in to set up yet another shopping account. Just click and order. Fast, clean and efficient. Suddenly I will start to give preference to stores which offer this convenience, and favor them over other similar stores.

Not only that, but once 215 million of us start to demonstrate our preferences, it’s going to be extremely difficult for stores to ignore the option, in the same way that the clever retailers now offer Paypal as a general payment option. You’re just dumb if you don’t.

But note that this whole thing goes way beyond replacing Paypal. That’s kind of a given anyway, once people realize how many more benefits you get from shopping the Amazon way, and bearing in mind Paypal’s truly horrible reputation with retailers in general. It’s only a matter of time, if Bezos rolls this out around the world without any major hiccups, before Paypal becomes a distant 3rd option in the payments arena.

No, the whole point of this move is clear if you remember how Amazon works. Bezos loves grandiose strategies, and it’s obvious that this is just part of a plan to turn Amazon into a payment platform in exactly the same way the company has made its back end computing infrastructure into one of the world’s most important web serving platforms.

Amazon Web Services (AWS) which include S3, EC2, CloudFront and a large number of other highly sophisticated, yet low cost backend web services now power a huge part of the web we all use every day. It started with a simple, cheap file storage option back in 2006, and now powers the core of services such as Netflix, FourSquare, Pinterest and many more of the biggest entities on the Internet.

So why not do the same for online payment services? Not just a shopping cart or wallet, but become the de facto standard which every major online retailer – and small ones too! – rely on to interface with customers…payment, customer service, marketing, product returns, and more. If it were any other company, such as Microsoft, we could all have a good laugh and go back to our knitting, but this is Amazon. This company thinks big, and more to the point, it executes. Brilliantly and with precision.

So here’s our prognosis. This new service will start small, US mostly to begin with, but over time will start to gather steam as customers start to learn about the benefits. Some astute crossover marketing, offers, extended customer tie-ins (e.g. Amazon Local coupon deals especially tailored for Login And Pay With Amazon retailers) and more and very soon the roster of retailers sporting the yellow button will literally explode across the web.

At that point, not having the feature will produce such a hit to the bottom line that it will take on a life of its own, and suddenly the online retail world is all Amazon. Over the top? Maybe. But if you have doubts, just take a look back at the company’s history, and look at the track record of pulling off ambitious stunts. Then come back and think again.

Just remember where you heard it first.