At one end, it really simplifies lives for frequent book buyers (they are not few on the net). All you have to do is to create your payphrase and your pin on Amazon site and then you can use it on any third party site. It is an interesting way for Amazon to capitalize on its One-Click-Buy system for other websites.
It might be more secure as well so people do not have to leave their private information on any third party site. In addition, one can limit the allowed balance that can be used with this method for a given period. This is great to let teenagers knew that there is a limit for shopping online.
The downsides are not few! First of all, the configuration is really tough. It requires developers of shopping carts to comply with Amazon. Developers are really bad to simplify things and it seems the PayPhrase developers could not go our of their engineering environment when they have designed this flow chart.
In addition, the XML orders report is not well structured and can be smoothed further. The same can be said about the return information to the merchant site which is the most important: They are not enough. Much more parameters should be added and defined in order to allow people to explain better to the client what happened.
Security is another major concern as much of the information is being sent using front end tools (JS and AJAX). I did not have much time to look into this but Front End tools have higher odds of being affected by spyware.