Whose terms are they competitive with? There are credit cards that charge half the interest they do.The loan can be spread over two, three or four years depending on the size of the purchase, with Amazon charging interest at an advertised rate of 16.9%.
“The new Amazon Pay Monthly programme provides our customers with further payment options to suit their needs when shopping on our website, and it is easy, convenient and offers competitive rates and flexible terms.”
A lot of store credit cards, for places like SEARS, Kohls, etc., often have even more outrageous rates. We're talking 20-25% APR (I think APR is the right term here). Despite the fact that they seem like bad ideas, they exist and people sign up for them. Since people seem to shop Amazon more and more each year, I doubt they'll have trouble finding people who want to participate in this program.