Amazon is preparing to enter the mobile payments market, reportedly working to get retailers to accept Amazon Pay as a payment method.
The Wall Street Journal, citing people familiar with the matter, reported Amazon wants the service to be expanded beyond making payments online. The paper reported that Amazon in its initial push and has been working with gas stations, restaurants and local merchants that aren't competing directly with Amazon. A person familiar with the matter told the Wall Street Journal that retailers may be resistant to the effort because they would view it as a threat. The move is part of Amazon's efforts to be a part of every aspect of consumers' lives.
The paper noted it is not clear how customers will use Amazon Pay in physical stores. One idea is that they will scan a code on their phones. Other options are being looked at as well, noted the Wall Street Journal. Amazon will be battling a formidable player in the payments market given Apple said Apple Pay was accepted at more than 5 million in-store locations as of May.
Amazon's push into digital payments comes at a time when U.S. consumers have been slow to embrace digital wallets. Citing the Nilson Report, the WSJ reported that digital payments accounted for less than 1 percent of all card transactions in the U.S. in 2017. Amazon is also setting its sights on Asia for its digital payments push, given that region is a huge user of mobile payments apps such as Alipay and WeChat Pay. Amazon wants to first gain market share in the U.S. where competition isn't as fierce. The Wall Street Journal noted that Amazon is offering perks such as lower payment-processing fees or marketing services to get merchants to accept its digital wallet. That could work, noted the report. After all, rising interchange or swipe fees are accounting for a big portion of the costs and is something that retailers and credit card companies have battled over in the past. The report noted that for the 12 months through March of 2018, 14 percent of online shoppers in the U.S. used Amazon Pay outside of its website to make an online or mobile payment. That was down from the previous year, noted the WSJ, citing a survey from Bernstein Research.
The Wall Street Journal reported that in addition to working with merchants, Amazon has also been looking at ways to bring Amazon Pay to Whole Foods and is working to enable Alexa, its voice-activated digital assistant, an in-store payments platform.