Report: Amazon Offering Discounts to Retailers Using its Payment Service

Amazon.com is reportedly offering discounted credit card fees to retailers that adopt Amazon Pay as an option for their customers, according to people with knowledge of the matter who spoke to Bloomberg. The Bloomberg report said that Amazon has offered the discounts to several smaller sellers with higher credit card fees than Amazon, which can negotiate a lower fee because of its massive user base and sales volume. Amazon Pay, which has about 30 million users, lets online shoppers log into their Amazon accounts from other websites, enabling them to complete their transaction using credit cards and delivery addresses already stored rather than having to enter them again. For Amazon, that means drawing additional revenue from e-commerce sales on other sites. The service mostly appeals to smaller merchants that benefit from the trust shoppers place in Amazon, as well as minimizing the data entry required to complete a mobile transaction. An Amazon spokeswoman declined to comment on this report, according to Bloomberg. It couldn’t be determined how many retailers have received Amazon’s offer for discounts. The company typically tests such initiatives before rolling them out broadly, however.

Total Retail's Take: Amazon is showing its willingness to forgo profits in exchange for expanding a service. The company has been focusing on adding financial products and is reportedly working on launching a credit account service as well. Regardless if this Amazon Pay program gets rolled out nationally, the news has already gotten the attention of payment providers. Shares of PayPal, for example, dropped 4 percent after the Bloomberg story was published. What's more, other payment providers are prepping for Amazon entering their industry. Last month, for example, Visa and Mastercard announced the forthcoming release of combined online checkout button, abandoning their separate Visa Checkout and Masterpass initiatives. The networks’ joint effort has been seen as a challenge to Amazon Pay, as well as to PayPal, which is considered the U.S. leader in digital wallets with 237 million global accounts.