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Amazon.com Inc unveiled a $10 credit-card reader and mobile app for businesses, expanding further into bricks-and-mortar retail and the rapidly evolving mobile payments arena. The move pits Amazon against a slew of rivals including start-up Square, which popularized a card swiper that plugs into a smartphone or tablet and allows small- and mid-sized businesses like food trucks and coffee shops to quickly accept credit and debit transactions.
The new point-of-sale system, called Amazon Local Register, would give Amazon crucial data on how US consumers shop offline, analysts say. More than 90% of US retail sales still take place in physical stores, according to US government data. Recently an Amazon spokeswoman said all data from Amazon Local Register customers would be securely protected and would not be used merely for fraud protection and risk management.
Amazon is taking direct aim at mobile payment systems such as Square by introducing the Amazon Local Register, a credit-card processing device and mobile app designed to help small business owners accept payments through their smartphones and tablets. The move places the largest US e-commerce retailer in competition with Square and other established mobile payment processing systems such as PayPal Here and Intuit’s GoPayment. Amazon’s technology includes a card reader that attaches to a smartphone, Kindle or tablet. The reader processes credit or debit card payments via a secure Amazon network, the same one that processes Amazon.com purchases. The service is designed to serve on-the-go small business owners who might otherwise only accept cash or checks, including massage therapists, food truck operators and artists who sell their work at outdoor fairs.
There may be some hesitation among merchants to process payments through Amazon due to data sharing or competitive concerns, according to R.W. Baird’s analyst Colin Sebastian. The biggest technology firms like Apple Inc and Google Inc may also step up their investment in mobile payments, which is taking off as smartphones become ubiquitous. Amazon hopes to court small businesses in part by charging lower fees than Square and eBay Inc’s PayPal. Those who sign up for Amazon’s program before Oct. 31 will be charged 1.75% for each card swiped until January 2016. For those who sign up after October, Amazon will take a 2.5% cut of each card swipe, still less than Square’s 2.75% flat transaction rate and PayPal’s 2.7%. Amazon’s move was indicative of the blurring lines between commerce and payments, and ultimately Amazon competing against eBay/PayPal, Google and Apple in the mobile payment space, added Mr. Sebastian.