Amazon Offers Retailers Discounts To Adopt Payment System

An anonymous reader quotes a report from Bloomberg: Amazon is offering to pass along the discounts it gets on credit-card fees to other retailers if they use its online payments service, according to people with knowledge of the matter, in a new threat to PayPal and card-issuing banks. The move shows Amazon is willing to sacrifice the profitability of its payments system to spread its use. Swipe fees are a $90 billion-a-year business for lenders such as JPMorgan Chase and Citigroup, networks including Visa and Mastercard, and payment processors like First Data and Stripe, which pocket a fraction of every sale when shoppers swipe cards or click "buy now."

The financial industry's fees amount to about 2 percent of a typical credit-card transaction, or 24 cents for debit. But big stores such as Amazon and Walmart have long been able to negotiate lower rates for themselves based on their massive sales volume. Now, Amazon is offering to pass its discount along to at least some smaller merchants if they agree to embrace its Amazon Pay service. Previously, online merchants using Amazon's service have paid about 2.9 percent of each credit-card transaction plus 30 cents, which is divvied up among Amazon, card issuers and payment networks.

Retailers partnering with Amazon are dead, already

[DogDude]

Any retailer that helps out Amazon in any way is dead, already. It's just a question of when. Relying on, or working with your largest competitor generally doesn't work out in business.

Best Buy started selling some new Amazon gadget exclusively a few weeks ago. That's the end of them.

Re:

[ShanghaiBill]

Any retailer that helps out Amazon in any way is dead, already.

It can't be any worse than the Visa-MasterCard monopoly that currently exists.

Best Buy started selling some new Amazon gadget exclusively a few weeks ago. That's the end of them.

What? Best Buy is still in business?

Yeah no thanks

[drinkypoo]

Square already makes it pretty cheap. And if you're lucky enough not to have problems with Paypal (I'm that lucky, so far) they do too. Making Amazon more powerful is not in anyone's best interests

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[Actually, I do RTFA]

While this is true,PayPal and Square (and until this announcement) Amazon are/were all priced the same. It's nice to see some price competition in the payment space for small businesses. However, turnabout is fair play. I'd like to see CapitalOne start undercutting Google/AWS in cloud services.

in other words..

[Anonymous Coward]

they desperately want to track customers of other retailers; while at the same time, use the extra volume to leverage even lower transaction rates for themselves.

amazon is not being generous, they're being their data-whoring selves; and will use the extra data gathered against those same retailers who willingly gave it up to save a fraction of a percent in transaction fees.

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[jasno]

came here to say the same thing. That data is gold. It lets Amazon know who to target next.

Same strategy

[minstrelmike]

Forgoing profits to build market share works.
Amazon forwent profits for almost 2 decades while building market share, originally just selling books.
I can see them easily outlasting many of the other pay schemes. (Despite the moaning of vendors and the promises of Libertarians, tt actually costs a certain amount of money to track a transaction and credit is a loan of money and that costs something, too.)

Re:

[Anonymous Coward]

What does this have to do with libertarians ? Did you see government mentioned on this article ? And what promises are you talking About anyway? You have to actually ELECT those libertarians before you can complain about their promises, and if that ever happens just remember to measure them in % because they have a lot of catching up to do on broken promises from both democrats and republicans

Better solution: start taking crypto like we did

[Anonymous Coward]

I know a few think crypto currencies are a scam, but the reality is that crypto currencies reduce the cost of doing business. We save about 3% every time a customer purchases from us and use a crypto currency over a credit card. There are also various other benefits like no charge backs which add another 3% or so saved. Then we also are able to get discounts up to 30% or so above and beyond what we have to otherwise pay for certain goods that we sell.

There are also programs in place where you basically get

Impossible to compete

[sad_]

Amazon is so big now that it is impossible to compete.
They just take the loss, in the grand scheme of things, it's hardly a loss in their balance books. But as a competitor you won't be able to do the same without having to close doors.

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[drinkypoo]

When you talk about a cashless society, that is the world Amazon is creating right now. When they control 90% of all retail, and they don't take cash, what does that spell?

Gift card.

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[warkda rrior]

Amazon has never made a profit, I don't think. If they did, it was a small sector within the overall company.

That's certainly not true. Amazon has shown profit overall for the last 3 years in a row: https://ycharts.com/companies/... [ycharts.com]

Might be worth it, depending on how big you are

[MAXOMENOS]

Paypal and Square will continue to dominate the small business because setting up an account takes literally minutes. On the other hand, when my wife and I tried to set up Amazon Payments for her small business some years ago, it took weeks to sort out all the paperwork, by which time we figured out that Amazon Payments didn't fit our needs.

For medium-sized businesses (like a modest fast-food chain or an Etsy-type site), Amazon Pay might make more sense. Large businesses will likely get screwed by Amazon - that's part of Amazon's business model these days - and can negotiate their own terms with the credit card companies.