I wonder if these kind of initiatives slow the adoption of chip and pin credit cards in the US. If Amazon is willing to lower the fees for swipes, pin entered transactions could be even lower.
I think that one of the problems for chip and pin adoption in the US is that there isn't a compelling reason for US consumers to desire it.
Credit card fraud might be a pain-point for merchants, but it simply is not for consumers. On the rare occasion that somebody makes a fraudulent purchase on my credit card, my credit card company flags the transaction. In the exceptionally rare case that this fails, I just call my credit card company and tell them that the transaction was fraudulent. Takes no more than 5 minutes, and I can count the number of times I've had to do it in the past 10 years on one hand.
Why then would I want the hassle of punching in a PIN? I'm a consumer, not a merchant. I don't care about what benefits the merchant gets out of it.
I came here to make a similar comment. We need more companies pushing adoption of EMV here in the states. I know it isn't a perfect solution, but it is certainly better than the mag-stripe situation we have today. It makes me nervous whenever I see one of these devices being used in the wild. The first generation of Square devices were very easy to siphon raw track data off of. As a customer, how do I know that the device you have attached to your personal phone is secure? I don't know the security behind the latest generations of these devices, but it still makes me uneasy swiping my credit card on someone's personal device that has who-knows-what malware on it.
My AMEX points work out to 1.33% and my Capital One gives 1.5% . Both are statement credits. I haven't personally seen or been offered anything better than Capital One for that type of incentive.
I'd guess some points/loyalty hacker has figured out how to get over 1.75%, but it probably wouldn't be cashback through direct statement credits.
I used to have an HSBC card that offered 2% cash back on weekend purchases. Capital One acquired HSBC's accounts a few years ago and no longer offers that deal.
There is a Fidelity-branded Amex card that gives 2% on everything, with no annual fee. There are several other cards that give 2% on everything (Capital One Venture, Barclay Arrival+) but that bear annual fees.
Think of Amazon's role as an online merchant: they've built a 3rd party merchant system where other folks can use Amazon's retail and distribution. Then, they gathered centralized data of what sells, at what prices. They stepped in and started carrying more profitable items themselves.
Now, look at their role here: if this takes off, they'll have data on what merchants are selling, for how much, and to whom. These are items that Amazon wouldn't normally get sales data on because people choose local vendors instead.
If Amazon wanted to start pushing more into local markets (or different kinds of products), they can make a fortune off this data, and that's why they can afford to undercut companies like Square. It's a long term play.
Not quite. The rate after the promo rate is 2.5% which still undercuts Square. The 2.75% rate is for manually Keyed transactions. Also, the promo lasts until 2016, a good amount of time to convince users to switch and then keep them with marginally lower rates.
From the page:
"Sign up by October 31, 2014 to lock in this special rate through December 31, 2015. Pay 2.5% beginning January 1, 2016. Rates apply to all major credit and debit cards."
> If Amazon wanted to start pushing more into local markets (or different kinds of products), they can make a fortune off this data, and that's why they can afford to undercut companies like Square. It's a long term play.
Possibly. Alternatively, Amazon seems to operate under a business model something like: 1) enter an existing market with a product offering that is at best the same as the competition 2) undercut said competition with unsustainable pricing until you drive them all out and have a monopoly 3) raise prices, profit
More like the "shipping of amazon products" market, since I can't exactly ship my stuff with Prime. And I'm pretty sure Amazon was always the only provider in that particular market, so they didn't really do (1).
They haven't really reached (2) in any market besides books. As dominant as Amazon is, Wal-Mart still towers over them for just about every product category that isn't printed on paper.
I'd argue (3) shouldn't read raise prices - that isn't really Amazon's MO, (3) should read "leverage their de facto monopoly to squeeze suppliers for all they've got, Wal-Mart style". This is certainly happening in books.
That isn't a new strategy. Starbucks did it all throughout the 1990s, opening locations sometimes literally on every block of major cities, many of them money-losing. They waited for the existing coffee shops to be driven out of business and then thinned out their locations to a more sustainable density.
Amazon will gain by knowing what products sell most at what time of the week. It will allow predict where to roll out certain services. One day delivery? Done.
IIRC credit card companies don't have that much of this kind of data. For the most part when you pay with a card, the transaction details (for example line-items) are not reported to the cc company or processor.
Also, I guess most of the merchants who sign up will be first-timers who accept cash before. Information from these people are what Amazon needs. Let's say in certain region there has been high sales of tea cups, I won't be surprised if one day Amazon starts suggesting its tea cup selections to buyers from that region, with free shipping and lower prices...
Can someone explain why manually keyed transactions cost more than swipes? I'm thinking there's more risk involved with those or something along those lines.
Yup! Those are referred to as 'card not present' transactions (just like shopping online) and due to the higher risk, there's a higher charge for processing.
In addition to the visible data (the card number, the expiration, and the CVV), there is other information encoded on the stripe that you cannot see (its called Track 2 data).
A swiped transaction will include the Track 2 data, but a keyed one will not. The Track 2 data proves that a physical card was present, which carries a far lower risk of fraud, and thus grants a lower processing rate.
Notably, in the recent Target breach, the Track 2 data was stolen as well. This means the thieves could print up real, swipeable cards.
Does anyone know how this could integrate with QuickBooks? We currently use Quickbooks Point of Sale to run the cash register and inventory and it loads into the QuickBooks company file each night.
I'd love to switch to something like this but I'm not really clear on how the accounting would work.
The rate at which Amazon is rolling out products is nothing short of dizzying. Reminds me of Google before Larry came back and retook the reigns. Inevitably they will come to a point where they start shutting down a subset of their enormous product line. It was one thing to have google wave or reader dropped, but when amazon kills some of these lines it'll affect people in real ways. And it will happen.
Here is for hoping they eventually focus on making their products better instead of constantly making new ones. Even look at AWS. I would struggle to name 80% of the services under that umbrella in under a minute.
You may be right, I agree that it's bound to happen at some point. I think one big difference is Amazon is rolling out revenue-producing products and Google was rolling out non-revenue-producing "experiments."
I agree with that to a point. But unless these products are profitable it doesn't really matter if they produce revenue. Folk long-argued that it was valuable for Google to have all of these free products because it kept them in the Google ecosystem. They were spending more time on Google, which had real value.
The problem is the cost that comes with lack of focus. Exploding headcount. Unclear corporate vision. When only a few of your products make nearly all of your money, why spend a bunch of energy on a lot of things that lose money, or make practically no profit?
I'd love to see Amazon spend real effort on making AWS easier to use [for people who are not deeply steeped in AWS already, it's hard]. For the love of God, I can't believe AWS console still makes you globally switch on region for everything. Can't there just big a dashboard that lets you see and control, ya know, everything? It's things like that. Things that have been bad for a long time. Instead of pushing out redshift or cognitio or zocalo or workspaces or elastic transcoder, how about they make AWS as a whole a better product? Something easier to user. Something more consistent.
Aren't most of Amazon's services profitable in isolation? I always thought the problem was they took those profits and immediately spent them investing in new services.
> I'd love to see Amazon spend real effort on making AWS easier to use [for people who are not deeply steeped in AWS already, it's hard].
That's the beauty of the API. There are already various vendors that do just this on top of it. The funny thing is, if you're a big guy too, say 10K instances, you also need to use 3rd party tools since the AWS UI can't handle that case either. But since everything is an API call you can build your business by making AWS better for hire. Then again, better hope your idea isn't killed off overnight when AWS does add it as a new feature.
The difference between the Google scenario and Amazon is that from what I can see, Amazon makes money on almost all of the products it's rolling out vs. Google not really directly making money out of most of its products.
If Amazon made money off 'almost all' of the products it's rolling out, it wouldn't be posting record losses every quarter and attributing it to those money-losing products.
That is because any new product has an upfront fixed cost in investment.
Amazon is investing like crazy into growth, and as a result all their new costs are new products.
Quarter to quarter their loss numbers are so low that it seems like they would only need to slow down their growth by a couple of percent and they would be instantly profitable.
They are "losing money" because they keep reinvesting all of their profits to facilitate all of these new products they keep turning out, and the market doesn't like it.
I'm guessing the product roadmap looks something like: Point of Sale -> Inventory Management -> All of your physical inventory is also available for purchase on Amazon.com
Large volume can get costs of infrastructure per transaction absurdly low; the true floor is the interchange rate that you pay to the card issuer; it depends on type of card but it can be ~1% for many of them. American express is much higher, taking amex at 1.75% is definitely a loss.
I've always wondered what kind of deal Costco did with American Express to make it the only accepted credit card. It's probably membership + exclusivity that allows AMEX to have much lower fraud and therefore pass on the savings to Costco.
I do know the "true bottom", but it is 200 pages of documents, and will depend on the mix of debit cards, Amex, and card levels such as Business/Signature/etc, and international, and average transaction amount.
If you are interested Visa alone, then the latest fee schedule is here:
1.45%-1.65% + $0.10 is a very common interchange for retail. The 1.75%+$0.00 pricing is going to be zero margin for them. If some merchant just uses Amazon for Amex, they will lose on that merchant. If the merchant primarily serves debit card customers, Amazon will make a small amount of money.
I'd assume so because the 1.75% is available for a limited-time only. The fine print mentions that the standard rates (after the promotional period) are 2.5% and 2.75%.
Amazon is the biggest competitor brick-and-mortar shops have ever seen; why would shops want to give that kind of information to Amazon, so that it knows in real time what people are buying outside of itself???
A coffeeshop, maybe, but for any other kind of business it sounds crazy.
Considering that consumers have months to make a chargeback, this is a relatively new thing in the payments industry (last few years). I suspect it'll make the horror stories that much worse when a small business owner has already spent the money that someone wants refunded.
Only if you sign up by November, and "1.75% per swipe until January 1, 2016". It's 2.5% after that. I guess you could switch back, but by that time Amazon could have already used your data against you. No such thing as a free lunch!
For the fresh, barista-brewed cup, you're almost certainly correct. But what about the bag of beans that someone buys along with their coffee? The coffee mug? Hell, go into a Starbucks sometime and look at any item you can buy that you don't have to ask for from someone behind the counter...all of that is what Amazon does better and cheaper (though not friendlier) than any small business can compete with.
1.75% may be competitive and better than rates of some merchants receive; however, I had a negotiated rate of .4% for one of my businesses.
One of the problems with the entire industry is misinformation, unlevel playing field (inability for your average merchant to negotiate the best rates), and the unscrupulous nature of the sales tactics of the merchant services themselves.
If you don't mind, could you please share how you got such an amazing rate? Were you negotiating on behalf of a huge corporation? Had a lot of sales? Gave them other business?
In the scheme of things it was probably a combination of many things. I am a lawyer; the account was for the law firm (not a large corporation); on the scale of things I would not say a lot of sales but the sale price per transaction was ~$150-$1500; I think above all being knowledgeable about the competition and the time/willingness to negotiate.
Do you know how the .4% gets split? I watched a Khan Academy video quite a while ago, https://www.youtube.com/watch?v=nRzTaWZ6ebs and Sal says the interchange fees charged by banks is on the order of 2%.
I have a friend who's about to start selling CC processing to local merchants at 1.29%. (His commission is 1/3 of that I think, so in theory the processor can go below 1%)
There's no way that is sustainable. The cards generally pay back upwards of 1% in points or cashback, so any processor that can offer rates under 1% is losing money somewhere.
Fidelity Amex offers 2% cashback on everything, and CapitalOne Silver offers 1.5% back on everything. So I'll say that anything under 2% is unsustainable.
But there's another guy who claims to have negotiated for 0.4% processing fee. I don't know how that is even remotely possible.
high reward cards like that are pretty rare at most businesses - i've been told by people at the credit card companies that they assume rewards cost 1% average.
and most gateways charge variable rate, so those high-reward cards are higher rate than the low-reward cards. 1.5% is a pretty normal base rate that any small-ish retailer should be able to negotiate for card-present transactions
There's a ton of businesses that can never move online. Food service is obviously a big one. Pretty much anything that requires face-to-face interaction or needs to be delivered near real-time (caricature artist on the beach, personal trainer, babysitting service).
I feel like that's confirmation bias. Restaurants come and go all the time; the ones that people don't go to close up shop really quickly because the margins aren't that great to begin with.
Well they have multiple pictures of food service on the site, so I imagine that is the target market. It seems like primarily a Square competitor to me.
"Amazon is the biggest competitor brick-and-mortar shops have ever seen"
Is it? The sorts of brick and mortar shop Amazon is a competitor to are things like Walmart or Best Buy, or other shops that compete on price or range of stock. But these big stores already have payment systems in place, and obviously aren't the target for this. If your shop hasn't already been put out of business by Walmart, I don't see why it would be put of business by Amazon, either.
Amazon competes with small stores, too. Sure, they compete more often and usually more directly with larger stores, but looking at my purchase history shows dozens of products that I probably would have bought at smaller stores if not for Amazon.
The concerning thing is that Amazon could use the data from small retailers to increase their competitiveness on products they identify as targets, so I'd say the concern is valid.
It's still a long way out, but Amazon wants to do drone deliveries that come within hours of your order. One of the main ways that local stores compete for my dollar with Amazon is the immediate gratification I get from being able to get a product that same day.
Yeah, even coffee shops shouldn't rush to embrace Amazon. Sure, I still get brewed coffee at my local coffee shop, but I might not buy a bag of coffee while I'm there because I bought a 2 lb bag of beans on Amazon.
Amazon is almost any store's competitor on some level. I'd be hesitant to use a payment system from even a small or indirect competitor.
Amazon will first analyze all your sales data, they will than attach reviews to your shop and finally they will oblige you to play by their rules or die (banned or killed by bad reviews) and either way they will grow thanks to your hard work.
I'm not joking, this is exactly what they have done (and keep doing) with "partners". Amazon is all but transparent and it has been growing like crazy during the last 6-8 years thanks to this exact strategy. Online is not enough anymore, they need to conquer local stores as well. The empire strikes back.
How they will implement reviews for local shops is speculation at this point, but yes. They will allow reviews for local shops and use them to influence buyers choosing where to cut their hairs or where to buy the best cakes.
I get your comment and agree with it, but... It's funny how us (the HN/startup/pro disruptive audience) is very pro change (let's get rid off the middle man because we can create software that can do this cheaper and more efficient) and now we are 'rooting' for the brick and mortar business. There is a sociological take away somewhere here.
Some change/progress is good and some is bad and that doesn't seem like a subtle point. I don't know how anyone gets into the mindset of assuming change is inherently good or inherently bad.
Amazon is a middleman too, just one that does lots of online shipping.
If they become the only middleman, than the situation gets much worse as there are no longer any market forces to keep Amazon's prices to be close to their costs. The only force at that point is Amazon's good will to not make a profit.
Don't worry. Amazon isn't even the biggest middleman:
"Last year, combined total volume of merchandise handled by Taobao and Tmall surpassed 1 trillion yuan, or about $160 billion, according to Alibaba. That figure was larger than Amazon’s $86 billion, according to RetailNet Group, or eBay’s 67.8 billion"
While I'm for technological progress, I prefer to live in an environment where small entrepreneurs can thrive, which requires me to be skeptical when a giant, borderline-monopolistic company comes along with 'new technology' that's true purpose appears to be to subvert small business owners and take their customers.
You don't get to be the underdog forever. There was a very long period there where people hadn't realized that Apple wasn't the struggling underdog vs. Microsoft anymore as well.
Monopolies are bad, and since all the people on HN are the small business owner (or want to be soon), making people aware of what's going to happen is kind of important.
It's also not new: there are players trying to do this type of thing in every industry. You even see it in medicine.
I agree with the sentiment, but it's more about the data. Amazon wants brick and mortal sales/pricing information so they can undercut you more effectively. They'll probably bundle in some service where you get an online store for cheap/free, which makes you even more dependent on them for inventory management as well.
At that point Amazon controls your cashflow and your products and--in a sense--owns your business.
Yes. And just to add another evilish detail: Controlling your cashflow means also that you are effectively borrowing them 2+ weeks of your income (as far as they will pay you with recurrent wires AFTER you have sold your stuff) at no cost. On a very low level, this is the mechanism that allowed them to survive for years without making profit on their products.
Well then one business day would be an improvement on cash flow vs a typical bank... or am I an idiot?
Obviously it's hard to compete with Amazon on commodity products, but it seems like they are lowering the barriers to entry for many unique retailers and small businesses.
The argument is that on some unspecified future date when Amazon has a monopoly, they can arbitrarily choose to hold payments for more than a day and screw up a business' cash flow and cause them major headaches.
Anyone who relies on PayPal today already accepts the risk of having their account/funds frozen, and there are already many horror stories of businesses having tens or hundreds of thousands of dollars locked up for a three-month investigation (only to go bankrupt in the interim).
Who actually reads reviews of "partner" shops on Amazon?
Don't get me wrong, I give out 5 stars for every one I deal with. Mostly because I rarely realize I dealt with them. Things arrive on time and as advertised. Does this not happen regularly for some folks?
I automatically check who I'm buying a product from on Amazon, and look at their ratings. It started for me years ago when I noticed it becoming ever more common that products were coming from other parties than Amazon, and also for Prime purposes. I'll often balance price against rating; if something costs $X, I'll pay $X more to buy from a very highly regarded supplier vs. one that isn't.
That said, I'm not sure I was aware there are actual reviews. I just check the scorecard.
I think the compelling case for this is less about shops - most of which (at least in the UK) already have some form card processing - but more about things like tradespeople (plumbers, decorators, electricians etc) or other physical services (e.g. music teachers)
Within a few years cheques will be phased out in the UK. This means the only way to pay a carpenter, or a plumber is in cash or a money transfer. Money transfers to new suppliers always take a bit of faff to setup, and a card payment like this would often be easier.
Cheques are not being phased-out in the UK. From the government FAQ [1] published in 2011:
Are cheques being phased out?
No. The Payments Council announced on 12 July 2011 that cheques will continue for as long as customers need them. A previously announced target for closing the cheque clearing system by 2018 has been cancelled.
Who do you bank with? I bank with both Natwest and Barclays and neither of those will let you set up a new payee on their mobile apps. Sure you can send money, but only to payees you have set up online using 2FA.
I think Barclays will be adding the new payee option soon to the mobile app, as they're trying to promote it as the way to do stuff. Plus they have PingIt which basically does the same thing, but is a bit of a faff for the receiver.
Yeah, I can see the Amazon branded food truck hordes flooding the streets of San Francisco. It is kind of sad that there is not going to be any burrito or garlic noodles sold.
In other words Amazon is no different than the existing credit card companies (Visa, MC, AmEx, ect...), the existing merchant services, and the retailers themselves who all collect that data for purposes of selling to third parties and use for in house marketing.
Brick and Mortar retailers are concerned about being able to conveniently accept payment and minimizing service charges for the convenience of accepting non-cash payment.
Ideally retailers wouldn't have to accept cards, they would only accept cash, cash = no service charge by a third party. However, that is the whole point of the financial industry to create an economy that permits middle men to take a percent of every transaction (as you say "grow thanks to your hard work"). Why have a store and sell anything when you can have someone else do the work and get a % of every transaction? But Amazon is not the first to do it.
Obviously Amazon is different, because unlike credit card companies they are in the business of competing with small retailers. Particularly when you consider their "your margin is my opportunity" strategy giving this data to them should be a terrifying proposition for any business owner.
But there are so many places that Amazon does not compete with that there is a market for this. Obviously a small book store might not want to do this but what about restaurants, coffee shops, the plumber that comes to fix your toilet (or any service industry), the local tap room, and so on.
Edit: Sorry, the idea of Amazon opening restaurants, coffee shops or tap rooms (which would also mean they start brewing their own beer) reminds me of this scene from Judge Dredd: https://www.youtube.com/watch?v=xFiDoOgRTpk (Now All Restaurants are Taco Bell)
Amazon might not be competing with them right now, but they could be in 5 years time (as ridiculous as that sounds for your examples), and businesses should take the long term view. When it was just books most businesses ignored Amazon, but they've grown to encompass many, many industries now.
You know how ridiculous it would have sounded if I told you 15 years ago that you could specify any address and get a local 360° street view of it... Even in rural austrailia or inside a business. And that comes from a search engine company... That mainly makes money off advertising.
I don't know but Wal-Mart and Home Depot have tried muscling in on small shops multiple times and failed..meaning, opening mom-and-pop size stores. That doesn't mean Amazon will fail, just mentioning that very few people are aware that this is something the retail giants have been trying to do for some time.
The thing about Amazon is that every company who should be their competitor (Barnes & Noble, Borders, Wal-Mart) constantly botches it. They have the money to fend off Amazon. I guess that's what happens when bloated, dumb corporations get real, nimble competition.
It would be like if Amazon decided to take on Comcast selling cable TV. Comcast is huge, wealthy and established, but, and I don't think I would like this, but my money would be on Amazon because Comcast is rich but dumb.
Comcast is dumb, wealthy, established and has a huge reputation for being actively hostile to customers because of geographical monopolies.(possible that they do it because they are dumb but I put my money on the monopoly)
amazon competing would be a win for consumers most likely since they are pretty actively customer focused. It would likely be a loss to the people selling through them though. I like amazon as a consumer for the most part but apparently their tactics and policies toward retailers is less than shining.
Having reviews next to your shop would only be worse for your shop if you aren't a good shop to begin with. I think this is better for the consumer in the end (which is a motto Amazon also preaches), unless they turn evil and use their advantage to squeeze consumers, which isn't all that unlikely since they are a public compnay. But so far they've done a great job of lowering prices for many commodity goods, which most goods are becoming.
Yeah I don't disagree with you here, just pointing out that a small business owner who does compete with Amazon should maybe think twice before being attracted to the competitive rate compared to Square.
Well Amazon have started doing a local services marketplace. If they can become dominant they can start to control the flow of leads to these businesses and therefore control margins and pricing.
It is actually a very interesting point you raise from a legal perspective. Kind of on par with Google's ability to unfairly utilize their internet search data which would have crushed the competition is spaces such as hotel/airline booking, local review websites, ect...
For example, Google is under significant regulations as a result of the DOJ settlement[1], "To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from [flight booking] customers."
While I think jack-r-abbit is accurate about many business not competing with Amazon, if Amazon begins using financial data to unfairly stifle retailer competition, then they are playing with fire, Anti-Trust lawsuits are not cheap.
Cash handling is not free either. In many European markets paying by debit card is cheaper than cash for the shop, at least for the larger chains. That's why they offer cash back at the till.
There are non negligible costs for accepting cash. Major retailers have to have armored trucks to move cash, cash counts require more trained personnel. Even on a smaller level there is increased risk of theft or skimming from taking cash compared to credit only.
The whole point of credit is to extend purchasing power that you don't have on hand (cash). Merchants would lose money because people wouldn't be able to use a credit line and instead delay purchasing. Credit also allows for financing large purchases over time and the assumption of default risk.
One business type I can see this making sense for is food trucks, as I don't see amazon going into that business anytime soon if ever. Beyond that I tend to agree with you that giving amazon even more data seems like a horrible idea.
Amazon has a truck fleet that look almost like Foodtrucks. I've actually seen a retrofitted Foodtruck selling Fire's and the new Amazon Phone by the beach in Santa Monica.
This makes sense for more than just Foodtrucks. The pain of fees is a very real thing for retail startups and if amazon is also going to give us a terminal that can take the place of a $3k+ POS system, then I'd be seriously considering it.
Square is not the biggest competition to retailers anywhere, and Amazon has a history of using the sales data of their "partners" (on Amazon.com) to compete with them.
Square is a payment processor, and does not wear the merchant hat. Even if it sells the data, the merchants acquiring the data still needs to pay, bumping up the cost of business.
On the other hand, Amazon is _both_ payment processor and merchant. First it gets transaction fees (due to its volume, I guess it is paying around 1-2% for card transactions) from merchants, not a lot, but I doubt it really cares or plans to earn money from transactions. Second it gets sales analytics, and third, it can adjust its online strategies to match the trends it sees in this data. I would say #2 and #3 would be the whole point of launching this.
How is amazon going to undercut my barber or the brewery I go to with this data? It seems like there are plenty of businesses that could benefit from this and not be at risk to the "empire".
Exactly. All the concern trolling above is about boxed product retail, where you're "competing" with stuff Amazon already sells. The majority of local transactions are and have always been in the service economy where Amazon has nothing to offer.
This isn't an Evil Plot, it's just an attempt to leverage their existing payment processing abilities to get themselves a piece of Square's pi, much in the same way that AWS leveraged their existing IT infrastructure.
Could they mistreat retailers who are trying to make a living reselling boxed products? Yeah. But those retailers have mostly been killed off already by Big Box stores. This ship sailed long ago.
This is a tragedy of the commons argument. It's a nice sentiment, but Amazon doesn't need all that many merchants to sign up to get their data, so they will get the data on your shop, whether you sign up or not.
If you sign up, it's a 1.25% pay rise for 18 months ... Yes eventually technology will eat your lunch, but that's coming independant of your signing up or no.
Makes me think of how Google Analytics is a trap. Google already knows the organic & ppc traffic it sends you, but if you get plugged in to Analytics (or AdSense, for that matter), then Google gets to see what organic & ppc traffic comes from the other search engines, as well as other advertising, direct linking, etc. Google gets to see the whole picture of how everybody reaches your site ... sure gives the appearance of a conflict of interest, if/when they're also selling you ppc and if/when you're dependent on organic Google traffic, too.
Right and those two players are google and apple. Phone-present transactions with strong authentication and irrefutability would be far cheaper to process. Google had been screwing the pooch for years with android wallet. They should have owned this market years ago.
Wow, talk about doing a deal with the devil. Amazon will just apply their standard rule book to the situation and choke the market, and use the data to make it easier to determine what markets are worth investing in for hyperlocal sales tools.
It honestly seems like no good can come of this, it looks like a wonderful tool, but the risks? Eeesh.
What is it with swipe cards in the US? A lot of businesses in the EU don't take them due to security risks and only accept chip-and-pin payments,yet US parties like it's 1991?
The fraud liability shift for swipe cards in USA will be at the end of 2015, so there's some time still left - but such a card reader definitely isn't futureproof, and they'll need a new model after a year or so.
Can you provide any more information about this "fraud liability shift"? To whom is fraud liability shifting? By how much is it shifting? Why would such a shift concern Amazon?
EDIT: TIL retailers will have more liability. I suspect Amazon will find a way to pass that on to the actual retailer. Changes like this have a way of getting delayed in USA, as well.
Based on my experience with how EU shops approach swipe cards, the shift in the US is from the bank to the retailer, when it comes to responsibility for authorizing the transaction.
At the moment in the EU it's trivial to go to a shop, pay with a swipe card, scribble something on the receipt(most people working at the till are not used to seeing swipe cards so they don't check signatures too well), call you bank saying you don't recognize the charge, they ask the merchant for the copy of the receipt, compare the signature with the one they have, and because they don't match they reverse the charge, leaving the merchant with no goods and no money. So most shops simply don't take swipe cards to stop fraud - with pin-and-chip cards banks cannot reverse payments from merchants, because it's the bank verifying the pin, not the merchant.
My understanding is, that in the US banks cannot reverse payments to merchants,so no retailer has any problem with taking swipe cards, but if that responsibility changes, then merchants won't be happy to accept them anymore.
When the liability shift happens, what will change is that if there is an incidence of card fraud, whichever party has the lesser technology will bear the liability. So if a merchant is still using the old system, they can still run a transaction with a swipe and a signature. But they will be liable for any fraudulent transactions if the customer has a chip card. And the same goes the other way – if the merchant has a new terminal, but the bank hasn’t issued a chip and PIN card to the customer, the bank would be liable.
Or alternatively Bluetooth. iZettle’s approach is a selfcontained chip+PIN device that communicates with the app on your smartphone wirelessly. The app then handles 3G connection.
I’ve used these devices before. Merchant facing functionality (e.g. entering prices) is on the phone side, customer facing functionality on the box. The customer never needs to touch the phone.
Using the audio jack allows them to make a very dumb, very cheap reader. All you need is a magnetic head (like those in cassette decks) and a maybe a couple of basic components.
Ah, more 90's payment technology from the US. It's becoming a bit of a running joke. (Also, extremely annoying when you live in a city with lots of American tourists that think you can still pay that way in 2014.)
Why on earth would you still develop new services for something that is so outdated and has been so completely broken and discredited even my 72 year old mother knows it's unsafe?
Security is a process, dude. Chip'n'pin has had its issues as well. (Issues which in some jurisdictions have been passed on to consumers. Fun!) The marketing efforts have certainly been more successful in Europe than in USA, however. I guess maybe we'll just have to bring more cash, or perhaps maybe vacation in more enlightened locales.
As a consumer, I'm hoping this makes it easier to find local services. There are a number of options, but none are great.
Angie's List has mediocre search and an awkward interface. Craigslist can be great, but it's more often wading through a cesspool of spam and shady companies to find the few decent ones. Yelp seems to have pretty good reviews for restaurants, but not much else.
They're not that similar, aside from common UI elements seen all over the web, and showing the device and app. Honestly, the Square page looks like a typical theme you can buy on ThemeForest for less than $20
Although not unsurprising. Once corporations get large enough you get this sort of desynchronization. Maintaining product development secrecy while also ensuring internal teams have aligned goals can be difficult.
Unfortunately, the reality is that small business and service providers will use this service because they won't realize that the long term implications of this Amazon move will work against them. For them, everything is short term (swipe fees, reporting, etc.), and when we are talking about the "future them" that is "someone else" 10 years from now.
This is really the prisoner's dilemma with thousands and thousands of prisoners.
Alternatively, it is the frog inside the boiling water. The frog never jumps out of the water. It just dies.
1.75% limited of time offer makes me want to vomit. The one thing I like about Square is at least they're not like other CC processors that make the careers HIDING fees from their merchants. Now Amazon is coming out the gate doing this. Many of us are fighting these fees online - even the CC processors like Stripe are at least straightforward with their fees even if they're forced to make them higher than they'd like - but it looks like for in person swipes we're stuck with the status quo.
It's temporary - they're making it seem like it's lower than it is. They're going to lock people in and then jack up the rate - it's classic CC processing trick and it's BULLSHIT. Even if the real price is written somewhere, it's still horseshit.
This is my point - y'all aren't even reading what Amazon is saying! They're LITERALLY going to raise the price to 2.5% - it's on the page! It's actually spelled out "we are going to raise our prices".
You are locked in at the rate if you get in before Jan 2016. I don't see anything wrong with that. It's promotional marketing to catch up to other players.
That's a legitimate opinion - but it's how the game has been played for in the CC world for a while. There's huge lock in to these providers and they know they'll get'm for years at a higher rate, and the merchants won't really be able to do much about it. It sucks.
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[ 3.2 ms ] story [ 235 ms ] threadCredit card fraud might be a pain-point for merchants, but it simply is not for consumers. On the rare occasion that somebody makes a fraudulent purchase on my credit card, my credit card company flags the transaction. In the exceptionally rare case that this fails, I just call my credit card company and tell them that the transaction was fraudulent. Takes no more than 5 minutes, and I can count the number of times I've had to do it in the past 10 years on one hand.
Why then would I want the hassle of punching in a PIN? I'm a consumer, not a merchant. I don't care about what benefits the merchant gets out of it.
I'd guess some points/loyalty hacker has figured out how to get over 1.75%, but it probably wouldn't be cashback through direct statement credits.
http://www.scotiabank.com/ca/en/0,,86,00.html
Now, look at their role here: if this takes off, they'll have data on what merchants are selling, for how much, and to whom. These are items that Amazon wouldn't normally get sales data on because people choose local vendors instead.
If Amazon wanted to start pushing more into local markets (or different kinds of products), they can make a fortune off this data, and that's why they can afford to undercut companies like Square. It's a long term play.
Yes, because Amazon never lowers their prices, do they? Read the news.
From the page:
"Sign up by October 31, 2014 to lock in this special rate through December 31, 2015. Pay 2.5% beginning January 1, 2016. Rates apply to all major credit and debit cards."
Possibly. Alternatively, Amazon seems to operate under a business model something like: 1) enter an existing market with a product offering that is at best the same as the competition 2) undercut said competition with unsustainable pricing until you drive them all out and have a monopoly 3) raise prices, profit
I'd argue (3) shouldn't read raise prices - that isn't really Amazon's MO, (3) should read "leverage their de facto monopoly to squeeze suppliers for all they've got, Wal-Mart style". This is certainly happening in books.
Amazon will gain by knowing what products sell most at what time of the week. It will allow predict where to roll out certain services. One day delivery? Done.
http://en.wikipedia.org/wiki/Card_not_present_transaction
A swiped transaction will include the Track 2 data, but a keyed one will not. The Track 2 data proves that a physical card was present, which carries a far lower risk of fraud, and thus grants a lower processing rate.
Notably, in the recent Target breach, the Track 2 data was stolen as well. This means the thieves could print up real, swipeable cards.
I'd love to switch to something like this but I'm not really clear on how the accounting would work.
Here is for hoping they eventually focus on making their products better instead of constantly making new ones. Even look at AWS. I would struggle to name 80% of the services under that umbrella in under a minute.
The problem is the cost that comes with lack of focus. Exploding headcount. Unclear corporate vision. When only a few of your products make nearly all of your money, why spend a bunch of energy on a lot of things that lose money, or make practically no profit?
I'd love to see Amazon spend real effort on making AWS easier to use [for people who are not deeply steeped in AWS already, it's hard]. For the love of God, I can't believe AWS console still makes you globally switch on region for everything. Can't there just big a dashboard that lets you see and control, ya know, everything? It's things like that. Things that have been bad for a long time. Instead of pushing out redshift or cognitio or zocalo or workspaces or elastic transcoder, how about they make AWS as a whole a better product? Something easier to user. Something more consistent.
That's the beauty of the API. There are already various vendors that do just this on top of it. The funny thing is, if you're a big guy too, say 10K instances, you also need to use 3rd party tools since the AWS UI can't handle that case either. But since everything is an API call you can build your business by making AWS better for hire. Then again, better hope your idea isn't killed off overnight when AWS does add it as a new feature.
Amazon is investing like crazy into growth, and as a result all their new costs are new products.
Quarter to quarter their loss numbers are so low that it seems like they would only need to slow down their growth by a couple of percent and they would be instantly profitable.
Not a bad spot to be in.
Exciting times, to see what unfolds in this payment war. Apple will certainly get there soon: http://acceptingpayments.quora.com/Apple%E2%80%99s-iWallet-A...
http://acceptingpayments.quora.com/Confirmed-Apple-iPhone-Ev...
http://acceptingpayments.quora.com/Apple-Patent-Shows-How-Pa...
Brilliant.
If you are interested Visa alone, then the latest fee schedule is here:
http://usa.visa.com/download/merchants/Visa-Interchange-Reim...
1.45%-1.65% + $0.10 is a very common interchange for retail. The 1.75%+$0.00 pricing is going to be zero margin for them. If some merchant just uses Amazon for Amex, they will lose on that merchant. If the merchant primarily serves debit card customers, Amazon will make a small amount of money.
Amazon is the biggest competitor brick-and-mortar shops have ever seen; why would shops want to give that kind of information to Amazon, so that it knows in real time what people are buying outside of itself???
A coffeeshop, maybe, but for any other kind of business it sounds crazy.
You: "The credit card fee is 1.75% until 2016, but Amazon can use your data against you."
Coffee shop owner: "I can add .75% to my bottom line for a year?"
You: "Yes, but Amazon can use your data against you."
Coffee shop owner: "I sign up where now?"
One of the problems with the entire industry is misinformation, unlevel playing field (inability for your average merchant to negotiate the best rates), and the unscrupulous nature of the sales tactics of the merchant services themselves.
But there's another guy who claims to have negotiated for 0.4% processing fee. I don't know how that is even remotely possible.
and most gateways charge variable rate, so those high-reward cards are higher rate than the low-reward cards. 1.5% is a pretty normal base rate that any small-ish retailer should be able to negotiate for card-present transactions
What about Amazon Fresh? https://fresh.amazon.com/ ? It seems there's no business too small or too niche for Amazon.
Is it? The sorts of brick and mortar shop Amazon is a competitor to are things like Walmart or Best Buy, or other shops that compete on price or range of stock. But these big stores already have payment systems in place, and obviously aren't the target for this. If your shop hasn't already been put out of business by Walmart, I don't see why it would be put of business by Amazon, either.
The concerning thing is that Amazon could use the data from small retailers to increase their competitiveness on products they identify as targets, so I'd say the concern is valid.
Amazon is almost any store's competitor on some level. I'd be hesitant to use a payment system from even a small or indirect competitor.
Amazon will first analyze all your sales data, they will than attach reviews to your shop and finally they will oblige you to play by their rules or die (banned or killed by bad reviews) and either way they will grow thanks to your hard work.
I'm not joking, this is exactly what they have done (and keep doing) with "partners". Amazon is all but transparent and it has been growing like crazy during the last 6-8 years thanks to this exact strategy. Online is not enough anymore, they need to conquer local stores as well. The empire strikes back.
They will come and stick reviews on your window or what?
If they become the only middleman, than the situation gets much worse as there are no longer any market forces to keep Amazon's prices to be close to their costs. The only force at that point is Amazon's good will to not make a profit.
"Last year, combined total volume of merchandise handled by Taobao and Tmall surpassed 1 trillion yuan, or about $160 billion, according to Alibaba. That figure was larger than Amazon’s $86 billion, according to RetailNet Group, or eBay’s 67.8 billion"
Monopolies are bad, and since all the people on HN are the small business owner (or want to be soon), making people aware of what's going to happen is kind of important.
It's also not new: there are players trying to do this type of thing in every industry. You even see it in medicine.
At that point Amazon controls your cashflow and your products and--in a sense--owns your business.
ITS A TRAP! :P
"Fast, reliable deposits. Deposits to your bank account the next business day. Or spend your money at Amazon.com within minutes."
Obviously it's hard to compete with Amazon on commodity products, but it seems like they are lowering the barriers to entry for many unique retailers and small businesses.
Anyone who relies on PayPal today already accepts the risk of having their account/funds frozen, and there are already many horror stories of businesses having tens or hundreds of thousands of dollars locked up for a three-month investigation (only to go bankrupt in the interim).
Don't get me wrong, I give out 5 stars for every one I deal with. Mostly because I rarely realize I dealt with them. Things arrive on time and as advertised. Does this not happen regularly for some folks?
That said, I'm not sure I was aware there are actual reviews. I just check the scorecard.
Within a few years cheques will be phased out in the UK. This means the only way to pay a carpenter, or a plumber is in cash or a money transfer. Money transfers to new suppliers always take a bit of faff to setup, and a card payment like this would often be easier.
Are cheques being phased out?
No. The Payments Council announced on 12 July 2011 that cheques will continue for as long as customers need them. A previously announced target for closing the cheque clearing system by 2018 has been cancelled.
[1] https://www.gov.uk/government/news/frequently-asked-question...
How so? If I want to send money to a UK bank account to which I've not send money before, I:
1. Open my bank's app on my phone
2. Tap 'send money'
3. Type in the amount, the 6-digit sort code, the 8-digit account number, the person's name
4. Hit 'Send'.
It's a little slower than swiping a card, but it also feels safer, as I don't have to give someone physical access to my card.
Brick and Mortar retailers are concerned about being able to conveniently accept payment and minimizing service charges for the convenience of accepting non-cash payment.
Ideally retailers wouldn't have to accept cards, they would only accept cash, cash = no service charge by a third party. However, that is the whole point of the financial industry to create an economy that permits middle men to take a percent of every transaction (as you say "grow thanks to your hard work"). Why have a store and sell anything when you can have someone else do the work and get a % of every transaction? But Amazon is not the first to do it.
Edit: Sorry, the idea of Amazon opening restaurants, coffee shops or tap rooms (which would also mean they start brewing their own beer) reminds me of this scene from Judge Dredd: https://www.youtube.com/watch?v=xFiDoOgRTpk (Now All Restaurants are Taco Bell)
Who knows where amazon will go.
The thing about Amazon is that every company who should be their competitor (Barnes & Noble, Borders, Wal-Mart) constantly botches it. They have the money to fend off Amazon. I guess that's what happens when bloated, dumb corporations get real, nimble competition.
It would be like if Amazon decided to take on Comcast selling cable TV. Comcast is huge, wealthy and established, but, and I don't think I would like this, but my money would be on Amazon because Comcast is rich but dumb.
amazon competing would be a win for consumers most likely since they are pretty actively customer focused. It would likely be a loss to the people selling through them though. I like amazon as a consumer for the most part but apparently their tactics and policies toward retailers is less than shining.
How about totally unfair, if not abusive reviews (http://www.modernluxury.com/san-francisco/story/the-toxic-ab...)?
Or a bunch of people ganging up to destroy a restaurant. Even if virtually none of the reviewers has ever set foot into the place? (http://evgrieve.com/2014/05/a-google-glass-feast.html)
A couple of bad reviews can destroy a business. No matter if they are true or not.
He responded politely, but basically said "people need to be allowed to forget that movie". So you are good.
For example, Google is under significant regulations as a result of the DOJ settlement[1], "To prevent abuse of commercially sensitive information, Google will be required to implement firewall restrictions within the company that prevent unauthorized use of competitively sensitive information and data gathered from [flight booking] customers."
While I think jack-r-abbit is accurate about many business not competing with Amazon, if Amazon begins using financial data to unfairly stifle retailer competition, then they are playing with fire, Anti-Trust lawsuits are not cheap.
[1] http://www.justice.gov/opa/pr/2011/April/11-at-445.html
Although why anyone would buy their decorative paper from the back of a van is beyond me.
This makes sense for more than just Foodtrucks. The pain of fees is a very real thing for retail startups and if amazon is also going to give us a terminal that can take the place of a $3k+ POS system, then I'd be seriously considering it.
On the other hand, Amazon is _both_ payment processor and merchant. First it gets transaction fees (due to its volume, I guess it is paying around 1-2% for card transactions) from merchants, not a lot, but I doubt it really cares or plans to earn money from transactions. Second it gets sales analytics, and third, it can adjust its online strategies to match the trends it sees in this data. I would say #2 and #3 would be the whole point of launching this.
Hair cutting drone perhaps?
This isn't an Evil Plot, it's just an attempt to leverage their existing payment processing abilities to get themselves a piece of Square's pi, much in the same way that AWS leveraged their existing IT infrastructure.
Could they mistreat retailers who are trying to make a living reselling boxed products? Yeah. But those retailers have mostly been killed off already by Big Box stores. This ship sailed long ago.
If you sign up, it's a 1.25% pay rise for 18 months ... Yes eventually technology will eat your lunch, but that's coming independant of your signing up or no.
It honestly seems like no good can come of this, it looks like a wonderful tool, but the risks? Eeesh.
EDIT: TIL retailers will have more liability. I suspect Amazon will find a way to pass that on to the actual retailer. Changes like this have a way of getting delayed in USA, as well.
At the moment in the EU it's trivial to go to a shop, pay with a swipe card, scribble something on the receipt(most people working at the till are not used to seeing swipe cards so they don't check signatures too well), call you bank saying you don't recognize the charge, they ask the merchant for the copy of the receipt, compare the signature with the one they have, and because they don't match they reverse the charge, leaving the merchant with no goods and no money. So most shops simply don't take swipe cards to stop fraud - with pin-and-chip cards banks cannot reverse payments from merchants, because it's the bank verifying the pin, not the merchant.
My understanding is, that in the US banks cannot reverse payments to merchants,so no retailer has any problem with taking swipe cards, but if that responsibility changes, then merchants won't be happy to accept them anymore.
http://blogs.wsj.com/corporate-intelligence/2014/02/06/octob...
https://www.izettle.com/gb/card-readers
See the disassembly of the Square reader: http://cosmodro.me/blog/2011/mar/25/rhombus-square-iskewedi/
Why on earth would you still develop new services for something that is so outdated and has been so completely broken and discredited even my 72 year old mother knows it's unsafe?
Angie's List has mediocre search and an awkward interface. Craigslist can be great, but it's more often wading through a cesspool of spam and shady companies to find the few decent ones. Yelp seems to have pretty good reviews for restaurants, but not much else.
1. http://localregister.amazon.com/
2. https://squareup.com/
3. https://www.paypal.com/webapps/mpp/credit-card-reader
This is really the prisoner's dilemma with thousands and thousands of prisoners.
Alternatively, it is the frog inside the boiling water. The frog never jumps out of the water. It just dies.
So Amzn should offer a lower rate, free perhaps? Or are they hiding fees somewhere else? Please you explain your aversion more.
Amazon has consistently made things inexpensive for the consumer. Sometimes even taking losses to ensure that customers get a lower price.