How Do Amazon Payments Work?

Amazon Payments lets you exchange money without handling actual cash.
Amazon Payments lets you exchange money without handling actual cash. (Image: Brand X Pictures/Brand X Pictures/Getty Images)

Amazon Payments is an online service that allows registered users to send and receive money by email or cellphone. If you need a quick way to exchange funds or send a gift, this service may be for you. Keep in mind, however, Amazon Payments does have its limitations, especially concerning the use of the money once it’s been received.

Sending Money

Once you’ve created an Amazon Payments account, you can send money to other users using their email address or mobile phone number. You can use money already present in your account from other transactions, or use a credit card to fund the transaction. There are no fees associated with this method of sending money, so what you send will be exactly what the recipient gets. You can even send money to someone without an account set up yet. However, the recipient will have to create an account as part of the payment retrieval process.

Receiving Money

If you need a little extra money, you can request another Amazon Payments user send you a payment. They will need your user name, phone number or email address to get you the funds. To send money via Amazon Payments, the sender will also need to have an account set up beforehand. You can send a request with a specific amount online to make sure the sender knows what you need.

Using Funds

Once you have money in your Amazon Payments account, you can use it in a variety of ways. The easiest way is to use it by shopping online through Amazon. If you want to redeem your payments in the form of an Amazon gift card, you must have a balance of at least $1. To get actual cash from your payment, you can transfer the balance to a verified bank account with no fees. However, you must have a balance of at least $10 to transfer the funds to your bank.

Amazon PayPhrase

Funds kept in your Amazon Payment account can also be used with a program called PayPhrase. This allows you to set a phrase of three or more words that can be used to purchase items online from participating retailers. This is a handy way to provide money to someone else without giving them specific credit card or account information. When you set up a PayPhrase, you can institute controls -- such as a maximum amount, so you can allow another user to use the phrase and still rest assured they won’t be able to overspend.

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