retail news in context, analysis with attitude

The New York Times reports this morning that Amazon has introduced a mobile credit-debit card reader called Amazon Local Register, described as "a black, compact rectangular card reader stamped with Amazon’s logo across the front. The $10 device plugs into a merchant’s smartphone or tablet, and works in conjunction with a smartphone app to process and track all of a merchant’s business transactions. It also comes with an enticing offer: lower processing fees."

According to the story, "Amazon is offering early adopters an especially low processing fee on each credit card swipe processed. If a merchant signs up before the end of October, each swipe will cost 1.75 percent of the total transaction, a deal that will last until the end of 2015. That is a full percentage point below Square’s cut, which is 2.75 percent per swipe, and less than PayPal’s 2.7 percent charge as well. Even after the promotional deal expires, Amazon will charge merchants 2.5 percent."

While there are a number of companies making similar products - Square is perhaps the best known, but PayPal and Verifone also are in the category - there has not been one clear winner. While Amazon is late to the game, the hope seems to be that it can get retailers hooked into its ecosystem, and that over time they will use Amazon for more and more of their tech needs.
KC's View:
The feeling seems to be that Amazon doesn't need to make a lot of money on this program, that it hopes it will see a long-term payoff in terms of both volume and data generated by the card reader, which will allow it to market other products and services more effectively.

Which makes sense - for Amazon. For other retailers, I think, less so … because why would you want to do anything that would help a competitor that has as part of its broader business plan making you irrelevant?

I also cannot help but think, when I read about how Amazon doesn't have to make a lot of money on this because it will pay off in other ways … isn't that sort of how it got into its current mess to begin with?