Amazon Unglues From Its Payment Processing Services

unglueitlogoThis morning as I was getting ready for work, a letter popped into my email from Eric Hellman at, the crowdfunding site operating on a Storytellers-Bowl-style model in which it solicits donations to buy free publishing rights for various books. Hellman wrote that Amazon had informed that it will no longer process pledges for, and required the organization to void any pending pledges.

Hellman wrote that is suspending current campaigns, though the previous, successful campaign for Oral Literature in Africa is unaffected, and soon to be released under a Creative Commons Attribution license for all to enjoy and use. However, the organization is in the process of implementing a new payment method and will relaunch as soon as it has one.

Laura Hazard Owen at PaidContent did a little more legwork while I was doing day-job work, pointing out that anti-fraud and money laundering provisions are a concern for any payment processing company, and quoting an Amazon spokesman citing “regulatory obligations” that Amazon cannot meet because “’s model is not the same as some other crowdfunding services.” No word on what the critical differences are, but another crowdfunding site received a similar notice from Amazon and switched to using WePay instead. Eric Hellman has said that is in the process of applying to take PayPal, but there is no word yet what its prospects are.

This isn’t the first time that payment processing has caused trouble for e-book sites. Earlier this year PayPal attempted to crack down on certain types of erotica by threatening to drop Smashwords unless it removed such books entirely from its site. PayPal (and the credit card companies behind it) was eventually convinced to back down, but the lack of any good alternative payment providers at the time pointed out the same sort of problem is running into now. The ‘net has attempted to invent a number of possible alternatives, perhaps most infamously BitCoin—but the fact that BitCoin is being used for an estimated $2 million a month in on-line illegal drug sales illustrates the problem with that approach.

I wrote several months ago for TeleRead of my doubts that can succeed at very many of its current goals—how many people are going to be willing to pledge money to unlock works that they’ve either never heard of or can get cheaply and easily by other means?—but I never anticipated something like this. If can’t find a payment processor willing to take it on, the project itself could be what “comes unglued.”

Chris Meadows

View posts by Chris Meadows
Chris Meadows, Editor of TeleRead, has been writing about e-books and mobile devices since 1999: first for ThemeStream, later for Jeff Kirvin's Writing on Your Palm, and then for TeleRead starting in 2006. He has also contributed a few articles to The Digital Reader along the way. Chris has bought e-books from Peanut Press/eReader, Fictionwise, Baen, Barnes & Noble, Amazon, the Humble Bundle, and others. He is a strong believer in using Calibre to keep his library organized.


  1. Len Feldman10 August, 2012

    Chris, what I think is going on–and this is from my interpretation of Amazon’s response to paidContent–is that it stopped handling’s transactions because funders aren’t receiving any tangible value in return for their contributions. With Kickstarter, for example, funders get something back at every funding level. That might have triggered Amazon’s concerns about money laundering. Let me be clear–I’m not suggesting that or its members are doing anything wrong. However, might need to return something of tangible value to funders in order to pass muster with transaction processors.

  2. […] to buy the e-book to read for themselves than to kick in so everyone could read it free. And the recent cancellation of its payment processing by Amazon seems to have necessarily put its plans on hold for a […]


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