E-commerce giant Amazon.com Inc. (AMZN) recently unveiled a mobile payment service, Amazon Local Register, to help small businesses easily carry out credit and debit card transactions through smartphones and tablets.
The users of Amazon Local Register service will have to download a new mobile app and plug a $10 card reader provided by Amazon to their smart device. Transactions can be traced through the mobile app, which will work on all smart devices, including the Kindle Fire.
Although Amazon has been successfully entering different markets, it might have to struggle to establish itself in the already crammed yet fast-growing mobile payment arena. The move will place the e-tailer in direct competition with other providers of similar credit and debit card mobile device payment services, including Twitter’s (TWTR) Square, eBay’s (EBAY) PayPal Here and Intuit's (INTU) GoPayment and VeriFone Systems Inc. Moreover, Amazon’s entry into the space comes five years after Square, which currently dominates the market.
However, Amazon can have an edge over its competitors given its popular brand name and huge customer base. Moreover, Amazon has plans to attract retailers through its pricing strategy. It plans to take a fee of 1.75% of each payment processed for customers who register by Oct. 31 and 2.5% for the ones who register afterward. The fee offered by Amazon is below Square’s 2.75% of each transaction and PayPal’s 2.7%.
In addition, Amazon has been broadening its payment space with other services including Amazon Payments, which enable customers to shop online with their Amazon accounts on partnering websites and is available on both personal computers and mobile devices, and Amazon Wallet, a beta app that allows customers to store their gift cards, rewards cards and membership cards and then redeem them online or at a brick and mortar store.
However, the e-tailer is under a certain amount of pressure from investors who are increasingly unimpressed with its huge investments that continue to yield low returns because of its aggressive pricing strategies.
Amazon currently holds a Zacks Rank #4 (Sell).
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