Amazon Local Register aims to lure retailers away from Square, PayPal

Amazon launched a new mobile payment service Wednesday aimed at luring businesses away from established competitors like Square and PayPal. Amazon Local Register allows local businesses to accept debit and credit card payments via smartphones and tablets for a flat-rate percentage on all transactions.

The card reader required to access the payment system retails for $10 and works on Fire tablets, Apple devices running iOS 7 and some Android phones. Amazon will offset the first $10 in processing fees, making the reader effectively free to the retailer.

"Amazon brings strengths and weaknesses to the payment fray. It holds credit-card information from more users than PayPal, for example, but it has virtually no experience in brick-and-mortar retailing," says Wall Street Journal's Joshua Jamerson. "Plus, merchants might be wary of doing business and sharing customer data with a competitor."

As Amazon tends to do every time they set their sights on market already lined with competitors, the company makes themselves look attractive to their target demographic by hitting them where it counts: the pocketbook. In addition to the subsidized card reader, Amazon is offering an introductory per-swipe rate of 1.75 percent until January 1, 2016. By comparison, Square's rate is 2.75 percent.

By offering the introductory rate for the next 16 months, Amazon no doubt hopes to tempt retailers away from competitors and become a dominating force in the market. Amazon sometimes takes it on the chin for being late-to-market with emerging technology but they've actually got a very smart strategy. Namely, let other companies go through the pain of hooking an untapped market on a new idea so Amazon--and its deep pockets--can swoop in and poach customers at a price point competitors can't effectively match.

For more:
- check out the Amazon Local Register website
- read the WSJ article

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