Amazon Undercutting Square on Price with Local Register
Amazon is upping its game against Square and PayPal for small business dollars, this week launching Amazon Local Register, a card reader that allows Main St. to accept credit and debit cards via smartphones and tablets.
“From clothing stores to contractors, food trucks to accountants, businesses and organizations using Amazon Local Register will enjoy industry-leading low rates, trusted and secure payment processing, and access to award-winning customer support,” said Matt Swann, vice president of Amazon Local Commerce, in a statement. “We understand that every penny and every minute counts, so we want to make accepting payments so easy and inexpensive that it no longer gets in the way of a business owner doing what they love - serving their customers and growing their business.”
And Square said Amazon’s decision to go into mobile payments validates its core business.
"We've long been focused on building a complete register service for local businesses. This reinforces our mission and shows the demand for all of our services,” said a spokesperson.
Amazon’s reader costs $10, which the company says will be credited back to the user after account activation. Square’s card reader is available at no upfront cost.
However, Amazon will be undercutting its competitors on price when it comes to swipe fees. Amazon says it will charge 2.5% per swipe, compared to 2.75% for Square and 2.7% for PayPal. Additionally, the company says customers who sign up before October 31, 2014 will be able to lock in a 1.75% swipe fee until January 1, 2016.
And it may mean more than a new revenue stream for Amazon.
“Amazon is essentially collecting tons of small business data on how people are spending and receiving money,” said FBN’s Jo Ling Kent. “Therein lies the wisdom of what this does.”
Kent points out that Amazon is already collecting data through other products on the way consumers pay bills, shop and what they’re watching using Amazon Prime.
“Amazon is really getting into more micro banking here,” she added.
