Newsexisting merchants, low margins, initial public offer (IPO), huge volume-based transactions, credit card transactions processing
Nov 02, 2015 09:32 PM EST
World's largest online retailer Amazon has announced the closure of its 'Amazon Register,' a mobile point-of-sale payment service. The shutdown of Amazon Register will be effective from early 2016. Amazon Register is a major competitor to Square, a Silicon Valley-based startup and going for an initial public offer (IPO), and PayPal. Amazon's decision to charge less than the competitors didn't click for the online retailer as it realized that it's difficult to churn out huge volumes to generate revenues in the online transactions processing segment.
Amazon Register is a card reader and mobile app and it processes credit card transactions via mobile devices for businesses that deal with Amazon. It will no longer accept any new customer following the decision on closure taken by Amazon.
However, existing merchants can continue to use Amazon Register till 1 February 2016. Market circles were anticipating that Amazon was keen on mobile payments service to compete with Square and PayPal. Market observers feel that it's better to move beyond just facilitating online transactions and wiser to get the in-store purchase.
San Francisco-based Square is going public this year and the latest decision of Amazon came as a breather ahead of its IPO. Square has one major competitor off the field giving it much wider scope to operate.
As part of its credit card reader Amazon Register, Amazon provided an app and $10 worth credit card reader to small and medium-sized businesses. Credit card reader needs to be plugged to smartphone or tab, which is loaded with Amazon Register app, to process credit/debit card payments. It was launched in August 2014 and is scheduled for discontinuation on 1 February 2016.
Competing with Square, PayPal and Etsy is not that easy as the processing payments is an exceedingly difficult business. In addition to the stiff competition, low-cost mobile point-of-sale systems run on thin margins.
Hence, it requires huge volume-based transactions to generate revenues. Amazon was charging less than its competitors and started losing money on this segment. Amazon is continuously exploring new ways to innovate to offer better services to customers. "At this time, we have decided to discontinue the Amazon Register service," Amazon said in a statement.
Amazon has already launched its online wallet 'Amazon Payments' recently. Amazon Register is finding it difficult to enhance market share among small businesses as this segment is dominated by Square, which has millions of small businesses on its platform and recorded $23.8billion worth processing in 2014 alone.