Friday, February 10, 2017
Patrick Gauthier, Vice President at Amazon Payments attributes the rising number of consumers who choose the Pay with Amazon option to security and ease of use. "Amazon Payments brings the simplicity and familiarity of Amazon's buying experience to our merchant customers, making it easy for millions of Amazon customers around the world to pay using the information already stored in their Amazon account," he said.
Gauthier expects consumer expectations for speed, convenience and personalization to grow in tandem with Amazon's payment volume, which nearly doubled in 2016 due to the company's global expansion and entry into an array of new vertical markets, including government, nonprofit and travel sectors. The company plans to introduce new touchpoints designed to enhance in-store and online shopping experiences, he stated.
As Amazon extends its arsenal of ecommerce solutions, payments analysts are concerned the mega retailer may disintermediate payments industry issuers and acquirers. The company's diversified payment offerings include cashierless grocery store Amazon Go and an Amazon Rewards Visa Signature card that provides discounts on Amazon purchases.
Andrew Melville, Strategist and Customer Experience Designer at Continuum, sees the grocery store gambit as part of a larger payment strategy aimed at driving more traffic to Amazon. "Amazon hasn't announced any concrete plans for the future, but it should be obvious that its end game isn't to become a leader in the notoriously low-margin grocery industry, which averages just 1 to 3 percent," he stated in a guest post on Forbes. "I predict Amazon Go is part of a strategy to grow its payments business and continue expanding into physical retail."
Forbes contributing writer and finance executive Zach Friedman called the Amazon credit card an effort to retain and grow the Amazon Prime membership base, which he described as "a major profitability and growth engine" for Amazon. The card provides discounts on Amazon purchases of up to 5 percent to Prime members and up to 3 percent for nonmembers, he stated.
"The 5 percent cash back is a push to migrate more consumers from brick-and-mortar retailers (like Target and Walmart) to online (Amazon)," Friedman wrote. "By bundling the credit card with Amazon Prime, Amazon has an advantage over its retail competitors by providing free streaming content on top of the extra credit card benefits."
Amazon's steadily expanding global ecommerce footprint covers more than 170 countries, including Pay with Amazon newcomers France, Italy and Spain. More than 50 percent of consumers who use Pay with Amazon are Prime Members, 32 percent of overall spend in 2016 originated on mobile devices, and the average ticket price was $80, the company stated.
Amazon is working with 50 payments acquirers in the United States, Germany, United Kingdom and Japan in conjunction with its Amazon Global Partner Program. Company representatives said the global payment platform was useful in the aftermath of earthquakes in Japan and Italy, where it was used to collect and distribute donations and aid.
Payments expert David True, President of NYPAY, said Amazon's global customer and merchant base provides unprecedented access to consumer and merchant data. Additionally, the best weapon in Amazon Payments' arsenal is its ownership of the default payment method, he noted.
"The drones are just eye candy compared to the default payment method," True said. "Consumers rarely, if ever, change their embedded payment method, which means Amazon effectively owns ecommerce."
As he further contemplated Amazon's plans, True said today the company is a mega retailer with a massive amount of real estate; tomorrow it could offer a lower-cost payment option to its existing base and bypass the credit and debit card payment rails entirely.
"If the company wished to change the default payment method on ecommerce or m-commerce on a global scale, what's to stop them?" he said. "What company would be in a better position to give a targeted offer or knows more about consumer preferences than Amazon?"
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