As FAANG stocks lead the market lower during what has become a relentless Q4 selloff, Amazon is hoping to reassure anxious investors that the company’s relentless expansion and revenue growth will continue. To wit, the company is taking another big step toward establishing itself as the American WeChat or Alipay as it seeks to become the dominant player in electronic consumer payments in the US and beyond. According to the Wall Street Journal, the e-commerce giant is hoping to undercut Apple’s Apple Pay by persuading more brick-and-mortar merchants to accept its Amazon Pay digital wallet.
As it tries to build a foothold in payments outside of its Amazon Go stores, the company is reportedly focusing on building partnerships with restaurants and gas stations (businesses that have yet to be scalped by the Bezos revenue-absorption machine). To entice owners to give Amazon Pay a try, the company is dangling what appears to be a pretty enticing carrot: Amazon is promising to lower processing costs at a time when so-called “interchange” fees charged by Visa and MasterCard have been rising.
The mechanics of how customers will use the soon-to-be rolled out Amazon Pay haven’t been revealed: It’s unclear whether customers will scan product barcodes on their phones, or simply tap their phones at checkout kiosks. Apple has a slight advantage in the digital payments space – more than 5 million US merchants now accept its Apple Pay platform. However, unlike their Chinese peers where digital cash has become the de facto standard, US consumers have been reluctant to adopt digital wallets; fewer than 1% of all US card transactions. In China, paying street vendors in cash has become a thing of the past, as AliPay, TenPay and WeChat Pay have attracted more than half a million users.
Amazon Pay has been growing in digital sales. Over the past year, the number of online shoppers using Amazon Pay outside of Amazon.com has climbed to some 14% of online shoppers, according to Bernstein Research. But in-person payments are still lacing; Amazon is also pushing customers at its Whole Foods stores to start using Amazon Pay, which so far is only in regular use at Amazon’s handful of Amazon Go locations.
The Amazon Pay push in the US follows the company’s introduction of the service in Japan, where Amazon believes it will have an easier time convincing consumers who already use digital wallets to switch to Amazon. Amazon Japan has partnered with Nippon Pay to utilize the service at businesses in Tokyo and Fukuoka, according to Nikkei Asian Review.
If the progress in China has any bearing on the pace of adoption in the US, soon, paying with cash – and even physical credit cards – will be a thing of the past. For better or worse, global consumer commerce is inexorably moving toward a cashless society. And Jeff Bezos wants to make sure that his company will take an early lead.
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