
Amazon Offers Retailers Discounts to Adopt Payment System - uptown
https://www.bloomberg.com/news/articles/2018-05-02/amazon-said-to-offer-retailers-discounts-to-adopt-payment-system
======
simonsarris
$PYPL hugely down on the news. $SQ took a hit too, weirdly. (I mean at 2:50
PM, after hours is separate with SQ's earnings tonight)

Amazon dips its toes in this space all the time. It's hard to tell how serious
they are.

Amazon Pay has been relaunched at least once.

Amazon Register (CC processor which competed with Square) died in 2015:
[https://bits.blogs.nytimes.com/2015/10/30/amazon-shutting-
do...](https://bits.blogs.nytimes.com/2015/10/30/amazon-shutting-down-its-
register-credit-card-processor/)

Amazon Handmade (the Etsy killer) went nowhere and languishes. Surprised they
didn't kill it yet.

Amazon WebPay shut down years ago:
[https://thenextweb.com/insider/2014/09/11/amazon-killing-
fre...](https://thenextweb.com/insider/2014/09/11/amazon-killing-
free-p2p-money-transfer-service-webpay-october-13-2014/)

How do merchants know the investment is worth it this time? (Especially if
they may some day eat your market, once they have enough data on it.)

~~~
StudentStuff
It isn't worth the risk to switch to Amazon. The payments industry right now
is cutthroat, with First Data offering clients rates like 1.5 cents per
transaction and no basis points over interchange. This is insane compared to
what the merchant industry was charging just a few years ago, to the point
that many of First Data's own ISOs are being severely undercut on price by the
company that provides their own backend.

Why would you choose to be at Amazon's behest, when you can pay less and know
you won't need to lift a finger for multiple years wrt credit & debit
processing.

~~~
sho
> First Data offering clients rates like 1.5 cents per transaction and no
> basis points over interchange

WTF? Where are they offering this!? Even if this is true, which sounds
unbelievable, it's certainly not available globally

~~~
StudentStuff
They've been offering it to most of the clients I used to work with in the
grocery industry, Mercury is matching it too. Might not be available to every
SIC, but perhaps its a good excuse to buy into a small grocer that does
$150k/month in processing and run all your volume through that.

Grocers pay among the lowest rates for credit card processing, I think that
was a big part of Amazon's very loud attempts at grocery. They don't care
whether it succeeds if it knocks a few dozen basis points off their
interchange rates!

~~~
sho
Sorry but it utterly defies belief that Amazon were able to reduce their MDR
by loudly pretending to be a grocer.

    
    
      The banker scans the document with a frown. He strokes his chin thoughtfully.
    
      "Amazon.. Amazon. Where have I heard that.. Oh yeah, the grocer! Zero basis points!"

~~~
StudentStuff
MDR? Use english please!

Back on topic, different SICs[1] get different interchange rates from Visa,
Mastercard and the like. Multiple companies have sued to lower certain SICs
interchange rates[2]. Amazon's SIC has changed over time, and it could easily
be argued that they fit into multiple SICs.

Its up to the sales org that handles them to appropriately code their SIC,
Amazon could easily have switched to processing with a new platform for Amazon
Fresh, and slowly moved most of their volume over without negative
repercussions from Visa/Mastercard.

1 -
[https://en.wikipedia.org/wiki/Standard_Industrial_Classifica...](https://en.wikipedia.org/wiki/Standard_Industrial_Classification)
2 -
[https://en.wikipedia.org/wiki/Payment_Card_Interchange_Fee_a...](https://en.wikipedia.org/wiki/Payment_Card_Interchange_Fee_and_Merchant_Discount_Antitrust_Litigation)

------
voicedYoda
If I were a retailer, I’d be extremely leery of the largest e-tailer asking me
to process my payments. My customers know what they are buying from me. And
would the payment processor. And if the payment processor can subvert my shop
for their online store, then why would my client come back to me? I know
customer service, humaning, and all sorts of other anecdotes are supposed to
help, but in the end, folks just want the best quality for the cheapest price.
Barring that, if a vendor offers a cheaper replacement that can be delivered
to the client’s door, why would they come back to my shop?

And this doesn’t even mention the itemized list of all stock that I might be
selling that this larger retailer now knows about me….

~~~
dazc
Agree with the sentiment but, purely from personal experience, I really don't
like submitting my details for every retailer I might buy stuff from. Not so
much from a security pov but all the hoops I have to jump through like
creating a username and password that's actually accepted first time, and so
on.

I've gotten to the stage now where I won't buy from another retailer where I
have to create another account, if at all possible.

As consequence my online purchase history (aside from grocery shopping) for
the past 3 years is almost exclusively amazon.

If I were a retailer I would be looking to make the buying process as slick
and seamless as possible and, alas, amazon can provide me with a solution.

------
stanmancan
This would be the last thing I would want to use as a retail store.

1) Customer buys product X from me

2) Payment is processed by Amazon

3) Amazon matches the customer with their own records, sends an advertisement
for that same product, at a lower cost

4a) Customer returns product and buys from Amazon

4b) Customer orders from Amazon next time they need it

Edit: For the record, Amazon wouldn't even need to be able to identify the
exact products you purchased, enough damage could be done based only on your
businesses classification. Technology, clothing, houseware ect.

~~~
roburtguy
I'm not so sure about this. Customers already are familiar with purchasing on
Amazon. So if anything, Amazon increasing advertising for your product will
only increase demand for that product. And that same customer who made the
choice to purchase at your store should still purchase at your store since
that choice was there to begin with and they already chose your store.

The only difference would be if that customer was not familiar with Amazon's
offering prior to purchasing at your store. But only until we get concrete
numbers and evidence can we conclude if that number who will be driven to
Amazon would balance against the customers who are driven by advertising for
more demand towards your store.

~~~
stanmancan
Ultimately the difference will be quite nuanced for each individual user.
However, if Amazon is able to figure out what the user purchased (whether it's
directly provided during checkout, or they're able to identify it by looking
at the charge and comparing it to your publicly available inventory online),
it would be quiet easy for Amazon to say "Hey, you just purchased X for $100,
we have it for $80"

------
ilamont
As a merchant Amazon has to take a few other steps before I use Amazon Pay.

About a year ago I attempted to use the Amazon Pay WooCommerce Extension but
had to turn it off because it was basically taking over the checkout page,
placing itself at the very top of the page above the other payment options
([https://in30minutes.com/amazon-pay-woocommerce-extension-
why...](https://in30minutes.com/amazon-pay-woocommerce-extension-why-turn-
off/)).

Another consideration: How many vendors want to give even more power to the
Amazon juggernaut? I like dealing with healthy, balanced ecosystems, and right
now Amazon has far too much power in my product niche (publishing). It sucks
dealing with policy changes, neglect of the piracy problem, and the fear that
my account may be summarily penalized because of some algorithmic tweak or
obscure violation (recent example: "One or more of your products doesn't meet
the financial threshold established by Amazon and is no longer eligible for
advertising via Amazon Marketing Services." WTF does that even mean?)

The last thing I want to see is the payments space similarly dominated by a
greedy, uncaring giantco that "owns" the customers coming to my website. The
behavior with the WooCommerce extension made me realize how bad they can be.

~~~
roburtguy
I'm not familiar with the extension, but you can build your own using their
sdk. Extensions and auto-generated options usually have intrusive design
choices.

------
chrischen
One big advantage of PayPal over other payment methods (that's usually lost on
consumers) is that they have extremely friendly merchant policies when it
comes to fraud or seller protection.

With a credit card all it takes is a button press (or phone call) to reverse a
charge and it gets with-held for about 90 days at best, and completely
reversed with no recourse at worst. According to Stripe, card companies do not
communicate back about the status of these disputes in any way, and no
discussion is allowed except for one response from the merchant which requires
you to send PDFs (mostly automated by Stripe). They don't even tell you if the
customer withdraws the dispute and funds still get held for up to 90 days!.
And valid reasons range from fraud (on the buyer side) to simply
dissatisfaction with a product, all of which becomes the merchant's burden to
bear. On top of that, to add insult to injury, the credit card company adds a
fee to provide you with this terrible service.

PayPal, and most other "payment facilitators" do a much better job handling
disputes. In PayPal's case they provide a much fairer arbitration process
(funds are held by PayPal, and a website with message thread is created
allowing communication between the merchant, customer, and arbitrator). The
whole process happens within a span of days rather than months. And PayPal
manages to do this without charging any more than credit card companies do
(via Stripe et al). I've also done disputes through Affirm, a PayPal
competitor, and they equally handled them in a fair and easy manner.

This ends up making credit cards super risky for smaller merchants if their
transaction volume is low and transaction amounts are high. As someone who
runs a small business I highly welcome these alternative payment facilitators,
even if they charge the same rates as credit cards, because they do provide a
much improved service over the old credit card companies, and that's even with
all the convenience features services like Stripe provides.

~~~
snark42
> PayPal, and most other "payment facilitators" do a much better job handling
> disputes. In PayPal's case they provide a much fairer arbitration process
> (funds are held by PayPal, and a website with message thread is created
> allowing communication between the merchant, customer, and arbitrator).

How does this work if the customer paid Paypal with a credit card and
initiated a chargeback? I get the credit card/user could be blacklisted but
PayPal would still be out the money even if the seller won the arbitration
case.

~~~
dannyw
Card companies generally warn customers that they’ll be banned by PayPal if
they continue with the chargeback, and encourage them to file a dispute
instead.

~~~
StudentStuff
Never encountered this when filing a chargeback on an item or service
purchased through PayPal, nor has it negatively affected my PayPal account.

~~~
chrischen
It probably depends on how much you do it. I'd imagine they know how much
their average revenue per customer is and they'd cut people off after the
chargebacks exceed a certain threshold.

~~~
StudentStuff
Depends on the time of year, but especially when dealing with sketchy
merchants (low end providers/vendors), if PayPal gives me any gruff, its
straight to American Express for me. Perhaps PayPal wants to avoid violating
the terms of their merchant agreement, which banning users that weren't mostly
fraudulent would probably not jive with? American Express is very strict with
processors

~~~
chrischen
Amex probably has more to lose than PayPal does if PayPal went to war with
them.

~~~
StudentStuff
American Express isn't afraid to drop a large merchant if they're mis-treating
customers or not profitable, look at what happened with Costco.
Visa/Mastercard/Discover won't go to war, but Amex will with a smile on their
face.

------
userchris
Not related to the content of the article, but I'm impressed that Bloomberg
managed to add another layer of dark patterns to the auto playing scrolling
video- there's a full video overlay that you have to click through to unmute
the audio before you can actually stop the video from playing.

~~~
radley
If you're on Firefox, you can disable HTML5 autoplay:

[https://addons.mozilla.org/en-US/firefox/addon/disable-
autop...](https://addons.mozilla.org/en-US/firefox/addon/disable-autoplay/)

------
tramGG
Perfect play to:

1\. Find out what people are buying in stores and not on amazon, and figure
out how to get them to switch

2\. Use this data to target more advertising/recommendations across amazon

3\. Use the purchase data to perhaps create whole new brick and mortar stores
that cater to the most in-demand products in different areas, like a more
targeted walmart -- squeezing out the stores that once bought into this
program.

I'd say it's a short term win, at the sake of long term loss of stores.

That being said, companies like this should declare a non-compete with the
businesses they're luring in. Chomp!

------
delecti
From a merchant perspective, I totally understand being wary. Even as a former
Amazon employee I'm regularly surprised to learn new areas the company has
expanded into.

But from a customer perspective, I'd be glad for this to take off. I would
prefer to checkout using Amazon as a payment processor than Paypal, and Square
(seemingly the other prominent option these days) doesn't seem to let me use a
single set of credentials across merchants, which is always obnoxious. From a
customer perspective, I've had almost nothing but good experiences with
Amazon, and most of the bad ones (delivery estimate issues) wouldn't impact
this space.

------
resoluteteeth
This is pretty confusing, because it seemed like Amazon made a big push to
sign merchants up for its payment service 10 years ago and then completely
abandoned it.

------
SN76477
As a consumer I like Amazon but this has a lot of potential to cross ethical
lines.

I do not want to see Amazon analyzing my buying patterns across more vendors.

~~~
whoisjuan
They already do it. Credit Card companies like MasterCard and AmEx have been
selling data to advertisers for at least 8 years now. That plus all the data
you can extrapolate from other sources can give anyone an accurate picture of
your consumption habits.

~~~
whadaythunka
Is this in their TOS? Do you know whether one can opt out? Are there any
electronic payments schemes that (excluding the e-coins) don't share
consumption data?

~~~
whoisjuan
It seems that you can actually opt-out. Here is the website for MasterCard opt
out: [https://www.mastercard.us/en-us/about-mastercard/what-we-
do/...](https://www.mastercard.us/en-us/about-mastercard/what-we-
do/privacy/data-analytics-opt-out.html)

You probably can find similar pages for other companies.

~~~
KumarAseem
Their wording is very confusing for me - "To opt-out from our anonymization of
your personal information to perform data analyses, please provide your
Mastercard or Maestro payment card number below."

To me it sounds like, "we are anonymizing your personal info, but you can opt-
out and allow us to perform data analytics using your personal info as it is."

------
flylib
Amazon uses Stripe as well for some of it's transactions
[https://www.geekwire.com/2017/amazon-quietly-starts-using-
st...](https://www.geekwire.com/2017/amazon-quietly-starts-using-stripe-
process-e-commerce-transactions/)

------
saudioger
1\. Offer someone a deal that's too good to be true, because it is.

2\. hemorrhage money while undercutting competition

3\. Jack up prices once you've got enough market penetration to stick around
or have killed your competition

~~~
jfoutz
3\. Implement your business now that you have enough transaction data to prove
you can do it profitably

------
superkuh
I was wondering what was up with the amazonpay.com domain that appeared in my
NoScript list sometime the last couple week (on amazon.com).

So far Amazon still works without enabling it but I doubt that'll last.

------
akeck
When is doing something like this considered illegal "tying"?

~~~
ars
Maybe if Amazon required Amazon pay in order to use Amazon Multi-Channel
Fulfillment.

I can't think of any other case that might apply for tying.

------
arzt
Increasing returns in action.

