Why Shopify Has Payments Power Over Amazon

For Amazon, providing customer checkout and delivery services to merchants that don’t sell on its site offers a tantalizing growth opportunity. But to take full advantage of it, Amazon has to figure out how to work with archrival Shopify, which is a key gatekeeper because it sells e-commerce software to millions of mostly small online merchants. Now Amazon has agreed to let Shopify handle payments Amazon has traditionally arranged itself.

Shopify has immense leverage because of its relationships with online merchants that Amazon wants to work with. That includes many of the merchants that already offer Amazon Pay, which lets shoppers check out on external websites using their Amazon logins, according to two people with knowledge of Amazon Pay’s operations. In recent months, Shopify has begun moving toward handling payments for all Amazon Pay transactions made on its U.S. merchants’ sites and has started phasing out an integration that let Amazon handle payments itself.