Amazon Flows Into Mobile Payments Territory
08/13/14 5:29 PM PT
Amazon on Tuesday introduced Amazon Local Register to the mobile payment market, taking on such companies as Square and PayPal Here.
The product is a combination of a secure card reader, which must be purchased for US$10, and a free mobile app. Together, they offer a platform that allows businesses to accept credit and debit card payments using smartphones or tablets.
The product comes with customer support and in-app tracking capabilities.
Introductory fees for businesses that sign up before Oct. 31, are 1.75 percent per card swipe for major credit and debit cards. That rate will last until Jan. 1, 2016, after which the standard rate of 2.75 percent will apply. Manually keyed card transactions will be subject to the standard rate immediately. The system deposits the funds to a bank account the next business day.
Signing up is straightforward: Users create an account, buy the card reader, and then download the mobile app from Amazon Appstore, Apple App Store or Google Play. The card reader can be purchased from Amazon, of course, but starting next week, it also will be available at Staples.
The app is compatible with Kindle Fire tablets, the new Fire phone, Apple devices running iOS 7, and certain Android smartphones.
Customers will be able to recoup the cost of the reader, as Amazon plans to credit back the first $10 in transaction fees.
The Right Moves
Amazon is making all the right moves for a newcomer attempting to grab market share, said Vlad Zachary, director of omni-channel commerce for Upshot Commerce.
"In the short run, the lower transaction costs will be good for small businesses too," he told the E-Commerce Times.
"Sellers who avoided mobile payments due to lack of trust might reconsider, and merchants with relatively high transaction volume will definitely consider switching to Amazon Local Register, at least until 2016, when the lower transaction percentage is set to expire," Zachary said.
By then, however, Amazon likely will have made deep inroads into the market, and spurred adoption by small businesses that otherwise would not have considered such a setup.
When Amazon enters a new industry -- whether it's e-readers or data centers -- it tends to know what it is doing and to excel, said Trip Chowdhry, managing director of equity research at Global Equities Research.
"It has dictated the tone in the e-commerce arena and enterprise computing," he told the E-Commerce Times. "Mobile payments is the next sector that it will influence."
Small businesses also will be reassured by Amazon's heft -- it is a company that can throw ample resources at a new service. The customer service feature that will accompany it also will be a draw, added Chowdhry.
Fast Path to Revenue
As for Amazon itself, Amazon Local Register offers a fast path to more revenue, Rob Enderle, principal analyst of the Enderle Group, told the E-Commerce Times. "It has a large customer base already from its Amazon website and converting them should not be a problem."
Small businesses likely will flock to the offering, he predicted, because of their past experience with Amazon's payment processes, which are fast, easy and seamless for end-users.
Amazon could use a revenue boost, even at the margins. While the company is a trendsetter and force to be reckoned with, from its competitors' perspective, its bottom line numbers have been less than impressive lately.
It recently reported second-quarter losses that were nearly double what analysts had been expecting and warned shareholders that third quarter earnings were likely to be just as dismal, if not worse.