Paypal and relative newcomer Google Checkout will both face off against a new contender in the online payment arena as Amazon jumps into the ring with a service of its own. Called Checkout by Amazon, the new service gives online retailers the option of letting Amazon manage their payments, along with some compelling reason for letting them do so.

Surfers who already have an account registered with Amazon (and who doesn't?) will be able to pay for goods at sites using Checkout by Amazon using billing and shipping details already on file with the mega e-tailer. Sites using the service can also offer customers the same '1-Click ordering' as Amazon, order tracking and management, promotions, Amazon's purchase protection policy, and other nuances associated with shopping directly at Amazon.

"Customers will be coming through an experience that is really similar to Amazon's," said Mark Stabingas, VP of Amazon Payments. "People will like the familiarity and comfort associated with that."

Should Paypal be Worried?

While it's far to early to gauge what impact Google Checkout will have in the world of online payments, there's no disputing that Paypal currently runs the show. Ebay's acquisition of the online payment service for $1.5 billion allowed for a tighter integration into the massive online auction site, and Paypal has since branched out as a payment method found at just about any online retailer. With that kind of market penetration already in place, it becomes hard to imagine another service toppling Paypal's empire.

On the other hand, it would be a mistake for Paypal to become complacent in its position. PaypalSucks.com serves as proof that the online economy is ready for a competitor to step up, and it seems as though everyone has at least one horror story to share, whether it be about having their account frozen or dealing with unsympathetic customer service after being scammed.

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