Earlier today, the WSJ published a report on how Amazon is building a Kindle-based point-of-sale payments service for local merchants using technology it picked up via its Gopago acquisition –something we actually reported on back in December. In fact, this looks like just part of what Amazon has in mind. The e-commerce giant is also developing a solution for person-to-person payments — bypassing banks and other payment networks — putting it in even closer competition with P2P payment giant PayPal.

The P2P payment system, as it’s being conceived, would have a mobile component to it, and it would be cloud-based, so presumably usable over desktop, too.

Those Amazon phones we and others keep talking about could be coming soon — the latest that we’ve heard, by the way, is that they may get announced in the next 60 days and ship this summer. Building in a P2P service to sweeten the deal, and help differentiate the phones from the rest of the pack, could be a smart move.

Amazon describes the P2P solution as being part of a bigger strategy to build “products and services which will delight billions of customers as they buy and sell things in the real world.”

The company is currently looking to hire a number of developers for new payments services beyond those that it already offers online, through its own site and now on other sites. Some of the roles specifically are to develop products that will extend Amazon’s reach “from e-commerce to commerce in general”, and some are specified to work on products for local commerce.

One of the ads, for a position as a Senior Technical Program Manager in San Francisco (there is another, identical role in Seattle) is for someone to build a P2P payment product. It reads like this:

Our team is charged with extending Amazon’s value proposition (price, selection, and convenience) from e-commerce to commerce in general. We are building products and services which will delight billions of customers as they buy and sell things in the real world (as opposed to online). One of these products is person-to-person (P2P) payments. As part of this ambitious new initiative we need experienced Senior Technical Program Managers to help us deliver a set of innovative mobile and cloud based products. The customer experiences we are building are powered by secure, scalable, and highly available cloud services. You will work with multiple technical teams to deliver solutions, and will be the driving force that orchestrates all the moving pieces as needed to ensure successful and on-time delivery. If you are focused on delivering exceptional products and services that provide exceptional value to end customers, and like to be part of team that likes to have fun… JOIN US!

Among the qualifications, applicants are requested to have computer science backgrounds, seven or more years of software engineering experience, mobile app experience, as well as evidence of having cut teeth product delivery and startup experience.

There are a few reasons why it makes sense for Amazon to build a P2P payment platform. For starters, in a side-by-side feature war with PayPal, offering a solution to enable people to send each other money — the basic service that got PayPal started — would be an essential product for Amazon if it hopes to win business away from eBay’s payment leviathan. And PayPal is not the only one playing here. There is also Square with its Cash service and, just earlier today, Ribbon.)

Why match the features? Because making a payments platform as ubiquitous as possible makes it also more convenient. In payments, I can’t help but think that the solution that will be the most seamless to use will be the one that wins out. It’s the reason why so many mobile payments services have been such a flop: they’re just simply not as good as what is already in place, between cards and good old fashioned cash.

Apart from enhancing Amazon’s overall position in payments, and adding another mobile payment service into the mix, a P2P service would be useful for Amazon on a number of levels.

Developing world

As Amazon has grown, it’s been building out business into developing markets, where there are still a high proportion of “unbanked” consumers — that is, people without financial profiles in the forms of current accounts or credit histories. Creating a P2P framework is one way that Amazon can start to become a bank for these people and potentially bring them into Amazon as would-be customers. One person can transfer money into another person’s Amazon account. That money can then be cashed out, or it can be used to buy goods on… Amazon.

Of course, such a solution could also be applied in developed markets, too. Think here of parents topping up their kids’ allowance, in the form of an Amazon accounts, which can be used to buy books, for example.

Small merchant relationships

While a point-of-sale solution would help Amazon expand its relationship with merchants who sell in physical stores, a P2P solution could be used to bolster relationships with even smaller vendors who could use it to make and accept payments. This potentially expands the kinds of sellers that might appear in Amazon’s marketplaces, not just for goods but professional services, too, perhaps as a micro complement what it already offers with its Flexible Payments Service for developers.

We’ve reached out to Amazon for comment and will update this post as we learn more.

Photo: Flickr