Amazon and Payments

by Sarah Grotta 0

A column in ComputerWorld contemplates Amazon’s role in payments and whether Amazon will take a more direct approach and offer their own payment product. If Amazon created their own “Pay” solution and enticed all current customers both on-line and in retail locations to use their payment device, the face of the payments industry as we know it today would certainly change:

Amid the debris left by multiple failed payment platforms, Amazon possesses a huge installed base, with more than 310 million active customer accounts worldwide and more than half of U.S. households holding a Prime membership, which is why we see promise in Amazon and mobile,” Weinswig said. (Deborah Weinswig is a longtime retail analyst for Citi who today works as the managing director for Fung Global Retail & Technology, which bills itself as a retail think tank.) “Despite the ubiquity of smartphones, the mobile payments market is a nascent, fragmented one in the U.S., divided by technology platforms, closed systems and consumers’ reluctance to transition from a well-established system based on credit and debit cards.

“It is logical that Amazon would eventually turn its focus to this market, as it has huge advantages in terms of customers’ comfort using its retail platform, its platform-agnostic technology and its enormous installed base of existing customers,” she said. “Amazon wins customers with the convenience and ease of use of its platform, even on occasions when it does not offer the lowest price. The company has more than 310 million active customers who are already comfortable with using Amazon’s payment methods, and the company can likely leverage this customer base to conquer a fragmented U.S. mobile payments market.”

 Amazon joining the ranks of payment providers may make sense, however Evan Schuman, the author of this column reminds us that payments are a) hard and b) change is often slow:

Many merchants, especially smaller ones, don’t see much of an ROI from doing much beyond accepting payment cards with their existing systems. Without a compelling reason for shoppers to support this approach (see deep discounts), merchants won’t be risking much by not participating, any more than retailers who resisted Apple Pay haven’t paid a revenue price.

Amazon has proven resourceful in the past, but I’m not seeing a clear path for it to make any major changes in how much U.S. shoppers do business any time soon.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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