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.
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.
Having reviews next to your shop would only be worse for your shop if you aren't a good shop to begin with.
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, "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.
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.
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"
At that point Amazon controls your cashflow and your products and--in a sense--owns your business.
"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).
ITS A TRAP! :P
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.
Hair cutting drone perhaps?
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.
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.
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.
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.
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.
They will come and stick reviews on your window or what?
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.
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.
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.
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.
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."
Yes, because Amazon never lowers their prices, do they? Read the news.
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.
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.
What about Amazon Fresh? https://fresh.amazon.com/ ? It seems there's no business too small or too niche for Amazon.
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.
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?"
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
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.
Powering the payments system will give Amazon the data to do far more dynamic pricing (something which they have a lot of expertise in) for their vendors on Amazon Local which is a win for both the vendors and Amazon.
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.
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.
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.
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.
Having a 1.75% fee on this will probably have some of them experiment :)
I'm sure Amazon will shut that down, but I'd love to see how much spent people can run up before that happens.
It honestly seems like no good can come of this, it looks like a wonderful tool, but the risks? Eeesh.
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.
Forbes had a pretty extensive look a couple months back, the only big public airing it's gotten - http://www.forbes.com/sites/clareoconnor/2014/05/07/amazons-...
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.
Having access to consumer spend outside their platform would give Amazon an incredible leverage. They'd be able to understand where else you're spending your money, which would allow all sorts of revenue streams: up-selling, cross-selling, Amazon Deals, advertising revenue, selling the raw data to data management platforms (e.g., BluaKai).
They already do something similar with Amazon Payments, but it's mostly for online merchants. This can go much further, even to industries that they have no interest in entering. If you're paying a plumber or a painter, you may be interested in decoration. If you're buying a bicycle, you may need a helmet. Buy some baby clothes, and you may be expecting, and the perfect target for Amazon Mom (I hate this name; why not Amazon Baby, or Amazon Parents?).
And let's not forget about the revenue coming from selling your data and your cookies, which they already do with advertising partners. While banks and card issuers have been doing this for decades, they are typically clueless about how to reach to consumers other than via direct mail, or co-branded email catalogs. And matching PII and databases is something that the FTC doesn't like much.
It's brilliant move for them.
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.
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.
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.
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...
I am not familiar with the card reader hardware. Why is a microphone needed for processing a credit card swipe?
 - http://localregister.amazon.com/help/201549190/swiping-a-car...
I'd love to switch to something like this but I'm not really clear on how the accounting would work.
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.
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.
See the disassembly of the Square reader: http://cosmodro.me/blog/2011/mar/25/rhombus-square-iskewedi/
I'd like to include one of these card readers into my own mobile app; has anyone had success using an SDK for integration? CardFlight seems like it would work, but it's a bit expensive...
Amazon also makes revenue off of attached services to merchants (Fulfillment by Amazon, the webstore, etc). This is part of the reason why Square has been trying to buy up merchant value-add companies.
Small shop owners are more likely to be familiar with the amazon brand versus square or others so their marketing/promotion is easier.
Amazon very likely has tons of ways they can use the data they collect.
They have opportunities for upsell: shops can buy ads, integrate with amazon on their website, start selling on amazon, etc.
(speculation) Amazon sees threats from other competitors in this space, so they want to suck all the profit out of it.
Note also that the business owner can spend funds on amazon immediately, or wait for funds to arrive in a bank account the next day. So amazon has a chance for extra sales there.
I wonder if there's also a financial angle -- it says funds get deposited the next day, so it doesn't seem like amazon has a chance to sit on the funds for any length of time, but maybe there's some angle I'm not seeing.
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?