Has Amazon already won the mobile payments game?

Written by on August 21, 2014 in BillingViews, News with 0 Comments

Small businesses and mom and pop shops have always gotten the short end of the stick when it comes to credit card payments. Already on thin margins, they are forced by the credit card companies to fork over a percentage of each card swipe and follow a dizzying fee schedule that can easily add up to a significant amount taken out of their bottom line.

Then along came e-commerce payment companies that promised to simplify credit card processing for even the smallest businesses and bring them into the digital age. Square paved the way along with a number of other start-ups as well as bigger names such as PayPal, eBay, Intuit and others. And now the big elephant in the room has woken up and wants its share of this lucrative space.

Amazon has launched its own mobile point of sale (mPoS) system, going up against those other players in the brick-and-mortar space, a world that Amazon has undoubtedly had a hand in impacting negatively over the years.

Amazon Local Register, which ironically is receiving pretty horrible reviews at Amazon.com, will go toe-to-toe with Square and others and in fact will undercut similar schemes. Amazon is offering a special promotional rate per card swipe that’s valid until January 2016, and even its normal rate will be lower than the competition. The company is also essentially giving away the card reader for free; it costs $10, but each customer’s first $10 in transaction fees come back as a credit, making Amazon’s solution a no-brainer for small shops that grudgingly realize they need to enter the 21st century for payments but have been hesitant until now.

And in a bit of pure Amazon strategy, transaction fees can be deposited into a customer’s bank account within a day or become available as Amazon.com credit almost immediately. Amazon has also built up a reputation among smaller merchants by allowing them to sell to customers through their ubiquitous web presence.

While Amazon is in position to steal market share from established players, so far all it is offering is a physical card reader used for real-world credit cards. In an age when pundits and analysts keep telling us that the credit card is going the way of the dodo, why are they insisting on offering a dongle rather than developing an NFC solution like Google Wallet?

As we’ve seen, NFC has been painfully slow to take off; just ask Google, Isis and others that have hitched their star to the touchless payment method. But with rumors that Apple will announce support for the technology in its iPhone 6 next month, NFC may finally reach critical mass. But there are still millions of merchants in the U.S. alone that are not up on NFC, and you can bet the smallest businesses are probably not going to move toward it anytime soon.

So at least for now, Amazon seems to have hit upon a brilliant and shrewd business move: siphon businesses away from the competition with low fees and don’t worry about NFC since it may still be a ways off.

And now that Amazon has entered the tablet, smartphone, television and now payments space, let’s have some fun and try to predict what they’ll get into next!

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Anita Karvé

About the Author

About the Author: Anita is a writer and editor with 20 years of experience covering just about everything in the technology space with a focus on computer networking and telecommunications. She was managing editor of Billing & OSS World magazine and technology editor at Network magazine and most recently was in charge of newsletter coverage at TM Forum. .

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