Essentially an Amazon customer creates a PayPhrase which is a combination of a PIN and a > 2 word phrase to bypass the Amazon sign-in process (usually your email and password).  For sites that take Amazon Payments (or Checkout By Amazon - CBA as we say in the biz), your PayPhrase/PIN can get you to an express checkout also without logging in.

One interesting side feature of PayPhrase is that you can create sub-PayPhrases that you dish out to your teens with budgets attached so you can give the give kids the ability to use your Amazon account without seeing your CC information AND you get to monitor/manage their spending.  Here's the blurb on that part of the program: (click to enlarge).

It's important to note that PayPal just weeks ago announced their Student Account program - more on that later.

Finally you can setup different PayPhrases for different situations. Let's say you want to pay with your Amex and have thing shipped to work - you could use PhraseX. You can create PhraseY that is a Visa to home, etc.  This seems pretty cumbersome to me personally - I can barely remember my password let alone 4+ payphrase/PIN combos and what each meant when I set it up.

Let's look at the workflow and then think about the effectiveness of this new program.

PayPhrase Workflow

There are two parts to the workflow: 1) setup and 2) consumer facing -amazon.com/network partner.  Note that in each of these screen shots the blacked-out areas are to protect personal information.  Large red arrows have been added for emphasis in some places.

In the setup phase, you enter your desired PayPhrase and Amazon tells you if it is taken or not.