Amazon joined the mobile payment game with it’s Amazon Local Register
Similar with incumbents players (Square, Paypal to name the biggest), retail giant offers to download mobile application and purchase a piece of hardware (as per picture above) that connects with mobile device via audio jack. That (paired with Amazon account) is all you need to accept payments anywhere (not literally, so far Amazon Local Register is available in US only). Official promo video below provides you an idea about the offer.
The promotion strategy is very in line with Amazon’s approach to the business – undercutting competitors in price and working with intentionally minimal margin in order to get significant market share, huge volume and achieve solid absolute profit through economy of scale.
What good, bad and ugly can we say about the device and Amazon Local Register in general?
- Obviously the price. While Amazon charges for device $10 that payment works as a credit toward processing fee. Talking about processing fee it is 1.75% (for introduction period yet) versus 2.7% charged by Paypal (swiping cards, US rate) and 2.75% by Square. If you process say 100,000 per year that difference gives you $1K extra annualy;
- Number of positive reviews, merchants write that app and reader work fine for them and the usability of Local Register is better than competing solutions
- There are number of negative reviews as well (and there are more negative than positive reviews, both app and device have 2 stars ration on Amazon website), most common complaints were
- problems to run app on particular devices (including Amazon Fire Phone models, which is weird). Other devices user reported as not working include Note 3 and Galaxy 5. Probably the problems are related with the fact that Android version 4.0.4 + is needed and some people have older OS;
- mess with types of Amazon account required to use the solution. Some users reported that if your email is already associated with Amazon Payments account you have to create a new one, other writes that a personal account has to be switched to a business account;
- After introduction period (ending 31 December 2015) the rate reverts to 2.5%, which is still less than competitors offer, but not so big difference;
- Some reviewers accuse competitors (namely Square) in producing fake negative reviews. The quote (from review by aaaaaaaaaamaaaazooonnn) “After going through this process, it is very obvious that all of these negative reviews are from Square employees and likely from their marketing team.”
- One of angered competitors (Jason Richelson from Shopkeep.com) believes that the true reason of Amazon’s foray into this market is to get insights about your business and then use it to own advantage: “This is a Trojan horse they want you to put into your store so that Amazon can learn everything about your customers and your business,” and then enter to your niche and compete with you based on lower price (source – Forbes)
Hence there are conspiracy theories both in favour and against Amazon, use your own judgement to decide should you believe in any of them 🙂
Anyway, mobile payment space is getting hotter and it will be very interesting to see how it changes in the future.
Full disclosure: link to Amazon is affiliate, so if you buy something visiting them I may earn a bit of money