updated 07:35 am EDT, Wed August 13, 2014
Amazon severely undercuts competitor transaction fees for Local Register launch
Amazon is taking on PayPal and Square in mobile payments, by releasing its rumored card reader for smartphones. Local Register is a combination of the Square-style card reader and an accompanying mobile app to create a small and portable point-of-sale system, allowing retailers to directly accept physical credit and debit card payments.
The heart of the system is the card reader. Connecting using a headphone socket to a smartphone or tablet, the card reader is claimed to be stabilized to limit swiveling, minimizing the potential for mistakes when swiping the card. The card reader is priced at $10, though the first $10 in transaction fees will be credited back to the user, effectively covering the cost, and though it has free two-day shipping, it will also be available to purchase from Staples stores from August 19th.
The mobile app, for iOS, Android, and Kindle Fire, processes the payment directly through Amazon's payment system and deposits the funds into a bank account within one business day, with transaction fees priced at 1.75 percent until January 1st 2016, switching over to a flat 2.5 percent after that date. The app includes business tracking tools, for monitoring sales trends and peak sales times, and while all versions offer support by phone and e-mail, owners of the Kindle Fire HDX will be able to use the Mayday button for 24-hour assistance with the service.
Amazon Local Register is likely to be considered by PayPal and Square to be a major threat to its mobile payments business. Amazon's promotional transaction fee severely undercuts the 2.7-percent and 2.75-percent fees Square and PayPal Here respectively offer, with the 2.5-percent normal fee still being slightly lower. Amazon is also only operating the service in the United States at first, something the incumbents may need to capitalize on by expanding elsewhere before Amazon joins them in international markets.