Amazon has confirmed it is to enter the mobile payments market with a new local payments product that is likely to severely undercut competitors including Square, PayPal and iZettle.
Amazon Local Register, which is at present available only in the US, lets retailers take credit card payments using an iOS or Android device, or Amazon’s own Fire range of mobile devices, for a fee of 1.75% per swipe.
The fee is a percentage point lower than that charged by Sweden’s iZettle and Square, which was started by Twitter co-founder Jack Dorsey. Another rival, PayPal, already undercuts those services by 0.5%.
The lower fee is an “introductory offer” which will end on 1 January 2016, but even the standard rate of 2.5% is still one of the lowest on the market. The move hints at another land grab by the firm, which is well known for deploying aggressive price-cuts to build market share.
“From clothing stores to contractors, food trucks to accountants, businesses and organisations using Amazon Local Register will enjoy industry-leading low rates, trusted and secure payment processing, and access to award-winning customer support,” said Matt Swann, vice president of Amazon Local Commerce.
As well as undercutting competitors on fees, Amazon is offering businesses that sign up for the service a refund on the $10 cost of the card reader itself by refunding the first $10 worth of fees paid. The company is also offering retailers a $380 bundle that includes its Kindle Fire tablet, which can be used as a point of sale device.
Paradoxically, the introduction of chip and pin payments in Europe may have slowed the adoption of services such as Square and Amazon Local Register, which only use the magnetic stripe on the card to read the payment data.
Stripe readers are significantly cheaper to build than chip and pin readers, and don’t require the same security standards.
Although Amazon hasn’t announced any further plans beyond card readers, already commentators are examining the prospect of it using its vast database of credit-card data to simplify the buying process in the physical world, as well as the online one.
Square, the San Francisco-based firm which largely launched the concept of mobile credit card payments in 2010, announced in August 2014 that it had acquired Caviar, a food delivery startup.
“Caviar’s curated, seamless delivery experience is exactly the kind of service we want to provide buyers and sellers,” said Dorsey. “By making delivery such a fast, friendly, and easy process, Caviar gives time back to restaurants so they can focus on what they do best – cooking great food for their customers.”
Source: Guardian Technology
