Amazon launched a new card reader called Amazon Local Register, similar to Square, PayPal Here, and several other such “point of sale” payment-processing services. But what is sure to grab the attention of retailers is its fees: for the next 16 months, it will charge merchants only 1.75% to process payments through its reader.
The steep discount will likely cause merchants loyal to other existing card readers to consider the Amazon option, and it may help overcome another hurdle Amazon faces. As one Wall Street analyst, Robert W. Baird’s Colin Sebastian, said: “We also note there may be some hesitation among merchants to process payments through Amazon due to data sharing/competitive concerns.”
Amazon Local Register lets local businesses accept credit and debit cards using their smartphone or tablet. It also offers business tracking tools: “In-app reporting enables a business to quickly check bottom line performance, sales trends, peak sales times and more. All reporting is easily accessible from a smartphone or tablet and is password-protected.”
Retailers only have until October 31st to qualify for the promotional rate. Businesses who sign up after that will pay 2.5% on all transactions.
The Wall Street Journal cited a 451 Research analyst who said Amazon would not be making money on the payments processing. The newspaper said that by targeting brick-and-mortar retailers, “Amazon hopes to gain access to a new trove of data from consumers’ spending in stores, where more than 90% of commerce is still conducted.”
On the eve of Amazon’s announcement, PayPal blogged about its credit card reader, called PayPal Here:
“Our business partners have been telling us that they need instant access to critical sales data and insights while on the go. So we’re happy to share that we’re adding a new mobile Sales Reports feature to the PayPal Here app. With this feature, businesses gain critical insights into their transactions, how much they sell over a certain time period, how they sell (via PayPal, cash or credit card) and other important metrics. This move comes on the heels of our new business online account experience announced in June, which includes deeper transaction insights and data.”