A great use of mobile technology is the ability to accept credit card payments on any smart device without all the cumbersome hardware usually associated with point of sale terminals. Great for pop up shops or small business looking to make it easy for people to buy products and services without all the old school infrastructure. Companies like Square and Ebay have had products out there for quite a while and now Amazon has announced their entry to the market.
Their main selling point is that their fees will be 2.5% which will be below the industry standard of 2.75%. So the might of Amazon with a lower cost, surely this is a win win situation for small businesses and start-ups? Well don’t be so sure. I have recently come back from a 2,000 mile drive across Europe where I subjected my partner to eleven CDs on the birth and growth of Amazon. Called ‘The Everything Store’ the book focuses on Jeff Bezos and his founding of the Amazon empire. I hadn’t really realised their original ambition was not just to be a book retailer but that was their initial focus to get the business established. Their plan was to sell everything and use their ability to drive down costs which not only gave their customer a great experience but also put their retail competitors out of business. If you have a long drive coming up, I would highly recommend it, if anything to understand the underhand tactics and bully boy policies which the business shamelessly promotes.
This brings me back to the issue of Amazon helping high street stores with portable chip and pin devices. Because the real benefit to Amazon is being able to see what transactions those high street or physical businesses are doing and hence what products it should be selling online. It also gives it the advantage of knowing what costs people are putting on these products, buying habits and so forth. All important information for the largest online retailer.
Apparently this model has been the same one Amazon has used within its own marketplace. The marketplace allows anyone to sell goods via Amazon which amazingly start being supplied by Amazon directly soon after volume is noticed for that particular product. I assume it is a similar model to supermarkets who push up their margins by offering their own brand products next to famous brands once they know the volume of sales and potential market.
So while Amazon may be offering a cheap service, but it is not necessarily good for business.