Tracking Amazon’s Payment-Related Moves

Navigator Edition: August 2014
By: Grant Saunders

Over the past few years, Amazon has made a series of payment-related investments that have positioned the company to further diversify its payment solutions. Recently, the e-commerce giant has begun to show tangible signs of its developments, both in its traditional online channel as well as in mobile and point-of-sale. Amazon is in a unique position to further expand its payments capabilities. The company has reported to have over 230 million active consumer accounts, compared to PayPal’s 143 million, as well as a trove of consumer spending data derived from its online retail business.

Login and Pay with Amazon: In October 2013, Amazon launched ‘Login and Pay with Amazon,’ a service that enables consumers to pay with their payment credentials stored in their Amazon wallets, streaming the checkout process on third party websites and directly competing with PayPal, among other checkout services.

Subscription Payment Management: Amazon introduced a subscription based or recurring payments service in June 2014. Similar to ‘Login and Pay with Amazon,’ the service allows businesses to tap into Amazon’s vast customer base to help reduce friction in the payments process on third party websites.

Smartphone Launch: In June 2014, Amazon unveiled Fire, a smartphone designed by the company. The phone contains features such as an advanced image recognition technology called Firefly, which can be used to identify, and thereafter purchase, items scanned by the phone.

Amazon Wallet Launch: Amazon quietly released a beta version of its mobile wallet this past July. While the current version of the app, which was released on the Google Play store and comes pre-installed on the Amazon Fire, only supports gift and loyalty cards and not credit or debit cards, according to TechCrunch additional features may be in development, such as a solution for person-to-person payments.

Point of Sale Developments: Corroborating with reports released earlier this year by The Wall Street Journal and with internal Staples documents leaked in July, Amazon recently released a mobile credit card reading device, dubbed Amazon Local Register.  Similar to Square and PayPal Here, the device can be connected to mobile and tablet devices to accept debit and credit card payments. Amazon is offering a promotional rate and a subsequent flat rate fee per swiped transaction of 2.50%, lower than both Square’s and PayPal Here’s fee per swiped transaction of 2.75% and 2.70% respectively.1 The release of the hardware follows Amazon’s acquisition this past December of the cloud based commerce company GoPago, which provided point-of-sale software and hardware that allow consumers to order and complete retail transactions all on their smart phones. It appears that the current version of the hardware cannot accept payments from Amazon’s Mobile Wallet, but rather solely accepts swiped credit and debit cards.

Figure 1: Amazon’s Payment Developments Timeline

Fig-1_-Amazon’s-Payment-Developments-Timeline_14Aug14Source: The Wall Street Journal, TechCrunch, Reuters, eBay 10-K, and Amazon Press Releases.

The recent developments illustrate Amazon’s appetite to leverage its payment capabilities outside of the company’s on-line retail channel. While Amazon has been quiet about its payments strategy, given its recent activity it appears that the company is positioning itself to address an evolving set of merchant and consumer needs. Of course, Amazon joins a long list of non-traditional players that have made moves or have ambitions in the payments space given the convergence of retail channels and the reach of entities such as PayPal, Apple, Starbucks, Google, Facebook, Twitter, Square and the like.

1 Fees shown are the standard publicized rates for swiped debit or credit cards. Manually entered transactions generally demand a higher fee and merchants may negotiate different rates. Amazon’s promotional rate of 1.75 percent is offered until October 31st and is valid until January 1st, 2016. Fees for Square, PayPal Here, and Amazon are taken from their respective websites.

For more information, please contact Grant Saunders, Analyst, specializing in Credit Card Issuing,

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