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Amazon’s Local Register – Swiping with the Devil?

by David MacQueen | Aug 18, 2014

Amazon has launched a card reader and integrated app to take payments in stores, which it plans to offer to merchants with physical retail locations. It’s launching into a crowded market, with Square, PayPal, some banks and a whole host of others having already launched devices in a modern version of the gold rush. In order to attract merchants, Amazon if offering lower rates – an initial rate of 1.75%, rising to 2.5% next year. Square charges 2.75% and PayPal 2.7%.

However, it could take a lot more than the carrot of lower rates when Amazon has been busy destroying physical retail with a big stick. That stick has been its app, which actively encourages users to “showroom” – scan an item to see how much it costs on Amazon, and order it then and there from the internet giant rather than buy it from the store you’re standing in and where you saw the item in the first place. Retail stores have become free showrooms for Amazon’s wares. The stick also took on physical form a couple of months ago with the launch of the Fire smartphone, which even features a button on the side of the device to take you straight to Firefly, the next generation of its showrooming app which recognises over 100 million different items.

One question facing potential users would be "what happens to the data?". How much does this help Amazon, and how might the company use that data? If I sell them Calgon, will Amazon let them know that they sell Calgon at 20% less than I do? If I do some electrical work for a client, will Amazon Local serve that customer coupons for competing electiricans in the local area? Fundamentally, if I were a small business and wanted such a device, would I want to have one from a company set on stealing my business provide me that device and give them money and/or data with every transaction? The rates may be marginally lower than the competitors, and that may be enough to tempt some merchants, but it seems at best a Faustian bargain.


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