Amazon Payments Hinges on … Hardware?

Might Amazon be launching a payments service — today?

According on a report from Reuters, Amazon will be introducing a payment service — purportedly today — which will attempt to make it easier for Amazon users to make subscription-based or recurring payments. The service will let businesses access Amazon’s 240 million monthly active users to charge for things like a monthly cell phone bill or music subscriptions using the credit card information stored on Amazon.com.

This appears to be a somewhat limited payments service in that it is restricted to recurring charges. To expand the service — one that allows users to purchase items in a retail store, for instance — would likely require Amazon to offer a payments option within a mobile operating system. And that is a significant hurdle to overcome. Amazon’s current mobile OS, used in the Kindle, is a highly customized version of Android. Because that OS is not broadly adopted today, analysts believe Amazon must make inroads into mobile hardware in order to seize substantial payments marketshare.

As such, Amazon faces a number of hurdles. First, while Amazon has an extensive background as an e-commerce company, as a hardware manufacturer it remains behind Google and Apple. Amazon’s Kindle device has been popular, but its adoption and functionality is not in the same league as Apple’s iPhone and iPad lines or the wide array of devices that use Google’s Android platform (which includes Amazon Kindles). While Amazon is reportedly working on a smartphone with a 3-D interface, PC Mag writes that just including a gimmicky feature like 3-D won’t help Amazon poach users from Apple or Google.

James Wester, IDC’s Research Director for IDC Financial Insights, told Bank Innovation that he remains a proponent of Amazon and its potential payments system, but pointed out that Amazon’s greatest issue is getting devices into the hands of consumers, whether it be a Kindle or a still-unannounced smartphone.

While Amazon has the e-commerce expertise, Apple is the one with the massive user base. Apple, through the company’s iTunes accounts, has access to almost 800 million credit cards — which is more than three times the amount that Amazon has. If and when Apple decides to introduce a payments service, it will immediately have the largest user base in the industry. (It should be noted that many of these iTunes accounts aren’t active users.)

We will find out more from Amazon. Today?