Amazon’s ‘Pay’ payment system has been struggling to gain large-scale adoption. So the commerce giant has decided to pass along the discounts they get on credit card fees along to retailers if they agree to implement the payment service. (The folks at Pay Pal surely can’t be too happy about that.)
This move once again shows the Amazon will sacrifice near-term profits to gain market share.
Typical fees for credit cards are about two percent of the transaction, and debit fees are about 24 cents. But big retailers like Amazon and Walmart can negotiate lower fees just based on their enormous sales volume.
Previously, merchants were charged 2.9 percent plus 30 cents for each transaction. Those fees were divided up amongst Amazon, the credit card issuers, and the payment networks. As part of the test, its willing to negotiate lower fees with merchants who agree to a long-term commitment to the service.
Amazon Pay allows shoppers log into their Amazon accounts from other websites, enabling them to complete the transaction using credit cards and delivery addresses already stored with Amazon, rather than having to enter them again. Most retailers would flinch at giving Amazon a cut of their transactions, but if it makes a customers transaction easier, plus save themselves a few bucks, it might be an option worth considering.