Amazon Pays Merchants To Use Amazon Pay

Amazon is offering discounts to merchants who use its online payments service.

According to Bloomberg, online merchants using Amazon’s service have paid about 2.9 percent of each credit card transaction plus 30 cents, which is shared among Amazon, card issuers and payment networks.

Now the eCommerce giant is offering to negotiate lower fees with select merchants who make long-term commitments to use Amazon Pay.

An Amazon spokeswoman declined to comment, and it is unknown how many retailers have received the offer for discounts. Still, the news caused shares of PayPal to drop 4.1 percent on Wednesday (May 2), while Square lost most of its 3.7 percent gain from earlier in the day. Visa fell 0.9 percent.

In an interview with PYMNTS’ Karen Webster, Patrick Gauthier, Amazon’s VP of external payments, said that 33 million consumers from 170 countries are using Amazon Pay. Roughly half of those customers are members of Amazon’s coveted customer base: Amazon Prime. Nearly a third of the transactions made by those customers were done via a mobile device, with an average transaction size of $80.

The service allows online shoppers to log into their Amazon accounts from other websites, so they can complete the transaction using stored credit cards and delivery addresses rather than having to enter them again. Customers include Gogo Inc., which provides in-flight internet access.

Some merchants, however, have been reluctant to share information with the company out of fear that Amazon could compete with them later by selling similar items on its site.

The discount move is proof that Amazon is thinking less about profitability right now and more about spreading its use. That says a lot, since swipe fees are a $90 billion annual business, with lenders such as JPMorgan Chase & Co. and Citigroup Inc., networks including Visa Inc. and Mastercard Inc., and payment processors like First Data Corp. and Stripe Inc. earning a fraction of every sale when shoppers complete a transaction.