Amazon feels the squeeze in mPOS market

Amazon is discontinuing Amazon Register, its mPOS service that was intended to rival the likes of Square and PayPal.

 

Scrapped after one year

The service only debuted a year ago and was immediately seen as a threat to Square, not without reason since Amazon’s device only cost $10 and undercut Square’s processing fees 2.5 per cent per swipe to 2.75 per cent. There was also a promotion that lowered the rate to 1.75 per cent.

However, the reader was always operating on the slimmest of margins and by undercutting competitors like Square Amazon was probably losing money on the Register. More importantly, the company most likely decided that the promotions and efforts to appear more attractive a prospect didn’t translate into the large-enough user base it needed.

Perhaps its target users, the small and medium American businesses, didn’t feel comfortable working with a large corporation such as Amazon, which probably was an indirect rival what with its desire to sell anything the consumer wants.

“Effective October 30, 2015, we are no longer accepting new customers. Existing customers can continue to use Amazon Register until February 1, 2016. We regret any inconvenience that this may cause,” the company said on its Register page.

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The announcement on Amazon Register’s homepage

 

Liability shift

One should note the timing of the announcement – just one month after the US liability shift during which many businesses across the US adopted the EMV standard.

The shift forced the mPOS companies to up their game and take a cover-all-bases approach. The likes of PayPal and SumUp immediately introduced small readers that accept contactless, credit and debit cards as well as mobile payment services such as the ‘Pays’ of Apple, Samsung and Android. Amazon’s reader only worked with swipe cards.

The cost of upgrading the device to work with newer technologies like its rivals was probably another reason for why the service was scrapped. Already running on razor-thin margins with a lower than needed user base, seeing rivals roll-out readers that work with bluetooth and QR codes was probably the final nail in the Register’s coffin.

 

Square’s relief

The news will undoubtedly be welcomed in Square’s San Francisco headquarters because it will mean one less competitor and therefore one less headache to worry about. The payment processing startup already has to worry about launching a successful IPO at a time when its CEO is partially distracted by the small matter of running a multi-billion dollar social network.

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