takes on PayPal, Square with credit card reader

SAN FRANCISCO Wed Aug 13, 2014 12:36pm EDT

Amazon CEO Jeff Bezos is silhouetted during a presentation of his company's new Fire smartphone at a news conference in Seattle, Washington June 18, 2014. REUTERS/Jason Redmond

Amazon CEO Jeff Bezos is silhouetted during a presentation of his company's new Fire smartphone at a news conference in Seattle, Washington June 18, 2014.

Credit: Reuters/Jason Redmond

Related Video

Related Topics

SAN FRANCISCO (Reuters) - Inc (AMZN.O) unveiled a $10 credit-card reader and mobile app for businesses on Wednesday, expanding further into bricks-and-mortar retail and the rapidly evolving mobile payments arena.

The move pits Amazon against a slew of rivals including startup Square, which popularized a card swiper that plugs into a smartphone or tablet and allows small- and mid-sized businesses like food trucks and coffee shops to quickly accept credit and debit transactions.

The new point-of-sale system, called Amazon Local Register, would give Amazon crucial data on how U.S. consumers shop offline, analysts say. More than 90 percent of U.S. retail sales still take place in physical stores, according to U.S. government data.

On Wednesday, an Amazon spokeswoman said all data from Amazon Local Register customers would be securely protected and would not be used merely for fraud protection and risk management.

"There may be some hesitation among merchants to process payments through Amazon due to data sharing or competitive concerns," R.W. Baird analyst Colin Sebastian wrote on Wednesday.

The biggest technology firms like Apple Inc (AAPL.O) and Google Inc (GOOG.O) may also step up their investment in mobile payments, which is taking off as smartphones become ubiquitous.

Amazon hopes to court small businesses in part by charging lower fees than Square and eBay Inc's (EBAY.O) PayPal. Those who sign up for Amazon's program before October 31 will be charged 1.75 percent for each card swiped until January 2016.

For those who sign up after October, Amazon will take a 2.5 percent cut of each card swipe, still less than Square's 2.75 percent flat transaction rate and PayPal's 2.7 percent.

Amazon's move "was indicative of the blurring lines between commerce and payments, and ultimately Amazon competing against eBay/PayPal, Google and Apple in the mobile payment space," Sebastian said.

(Reporting by Deepa Seetharaman; Editing by Lisa Shumaker and Andrew Hay)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see
Comments (4)
Eric93 wrote:
No mention if it does the modern ‘chip and pin’ cards which should soon replace the old magnetic cards for security purposes. If it doesn’t have ‘chip and pin’ capability then it is just cheap ‘ancient technology’.

Aug 13, 2014 10:58am EDT  --  Report as abuse
SunnyDaySam wrote:
Anybody who takes on Ebay/Paypal has my vote! Especially a great Seattle company like Amazon.

Aug 13, 2014 2:59pm EDT  --  Report as abuse
Eric93 wrote:
No mention of if it only works with ancient magnetic strip ‘swipe’ technology , or if it also does the newer, more secure ‘chip and pin’ technology. The article failed to clarify this little detail.

Aug 13, 2014 3:57pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.