Amazon bows out of card processing

Amazon Inc. has deep-sixed plans to compete head-to-head with merchant acquirers. In a recent email to users of its Amazon Register service, the online giant said it is no longer accepting new customers. Existing customers can continue accepting payments using the devices until Feb. 1, 2016. The online retailing giant also is shuttering ad programs that link shoppers to other online sellers, according to several published reports.

Amazon Register is a card-reading dongle that attaches to smartphones. Users paid $10 for the dongle and downloaded the supporting app for free. The market for dongle card readers is crowded. About two dozen other companies have offerings similar to Amazon Register, including Chase Paymentech Solutions, PayPal Inc., ROAM Data Inc. and Square Inc.. Dee Karawadra, President and Chief Executive Officer of Memphis, Tenn.-based Impact PaySystem LLC, said the products respond to market demand. "This model is still very popular, and the market seems to grow," he noted.

The devices are frequently used by very small merchants, such as individuals selling at fairs and yard sales. An introductory deal for Amazon Register, set to expire on Jan. 1, 2016, assures users a per-transaction processing fee of just 1.75 percent.

In an email to Amazon Register merchants, dated Nov. 1, Amazon stated, "Effective February 1, 2016, we will discontinue the Amazon Register mobile point-of-sale service. We regret any inconvenience. … While you transition to a new point-of-sale service, you can continue to use Amazon Register to process your payments until February 1, 2016."

Ina Steiner, co-founder and Editor of eCommerceBytes.com, said shedding its register product is part of a major strategy shift at Amazon. "[R]ather than enabling merchants with their ecommerce businesses, Amazon wants them to sell directly on its marketplace, where it will be responsible for all parts of the sales process," she wrote in a Nov. 2 post.

From online to brick and mortar

In a related development, Amazon established its first brick-and-mortar outlet, Amazon Books, which opened in Seattle Nov. 3. The store opening is ironic, given that Amazon has been demonized for years as a slayer of brick-and-mortar bookstores. Amazon also has been a leader in the digitization of books and magazines. Now the company appears to be trying to capitalize on the massive amounts of data it has collected over the past 20 years on shopping patterns and reader preferences to stock titles it expects to sell well in Seattle.

Amazon has said Amazon Books will differ from other brick-and-mortar bookstores in key ways. For example, books will be displayed with covers facing out, instead of being tightly packed, spine-to-spine. Online reviews and ratings will also be displayed. Prices will be comparable to Amazon's online prices, the company said. Amazon Books also will carry related items, like Kindle e-reader devices, Amazon said. And it did not discount the possibility that additional outlets could pop up in other markets.

This is not the first brick-and-mortar endeavor undertaken by Amazon. It has previously opened pop-up stores to sell Kindles and related devices during holiday periods. It also operates several college campus bookstores.

Editor's Note:

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