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Amazon Offers Retailers Discounts To Adopt Payment System

An anonymous reader quotes a report from Bloomberg: Amazon is offering to pass along the discounts it gets on credit-card fees to other retailers if they use its online payments service, according to people with knowledge of the matter, in a new threat to PayPal and card-issuing banks. The move shows Amazon is willing to sacrifice the profitability of its payments system to spread its use. Swipe fees are a $90 billion-a-year business for lenders such as JPMorgan Chase and Citigroup, networks including Visa and Mastercard, and payment processors like First Data and Stripe, which pocket a fraction of every sale when shoppers swipe cards or click "buy now." The financial industry's fees amount to about 2 percent of a typical credit-card transaction, or 24 cents for debit. But big stores such as Amazon and Walmart have long been able to negotiate lower rates for themselves based on their massive sales volume. Now, Amazon is offering to pass its discount along to at least some smaller merchants if they agree to embrace its Amazon Pay service. Previously, online merchants using Amazon's service have paid about 2.9 percent of each credit-card transaction plus 30 cents, which is divvied up among Amazon, card issuers and payment networks.

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