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Amazon launches payment service

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Amazon (AMZN) launched an online payment service today called Amazon Payments. The company hopes the service will appeal to small businesses and start-ups with subscription or recurring payments, that want customers who may be reluctant to give credit card information to an unknown company.

Amazon Payments extends a existing service that allows its customers to use credit card information they have on file with Amazon to make payments on third-party e-commerce sites. The new service, which Amazon has been testing for several months, focuses on subscription or recurring payments. Amazon will charge a fee to the merchant for each transaction.

The debut of Amazon Payments will move into PayPal’s territory, which is owned by eBay (EBAY). The online payment leader has 148 million active accounts, but it has seen competition from other companies that want to offer payment services. The world’s-largest social media site, Facebook (FB), reportedly sought approval for an “e-money” service in Europe that would allow users to exchange money and make payments. The world’s-largest retailer, Walmart (WMT), announced in April it would allow customers to transfer money between stores in the U.S. Now, Amazon and its 240 million customers are getting in the game.

Yahoo Finance Editor-in-Chief Aaron Task said it makes sense for Amazon to do this. “People are already doing so many transactions via Amazon,” he said. “Why not offer this kind of service and see how PayPal responds?”