News Feature | August 19, 2014

Amazon's Local Register A Boon For SMRs

Source: Innovative Retail Technologies
Christine Kern

By Christine Kern, contributing writer

Credit and Debit Card Reader Connects to a Smartphone or Tablet for Easy POS Payments

In a move designed to court brick-and-mortar small businesses, Amazon has launched a new mobile card reader called Local Register, which provides users with a free app and a $10 card reader, designed to challenge Square and PayPal Here in the marketplace.  As an introductory offer, merchants who use it will pay just 1.75 percent per swipe – a full percentage point lower than Square’s 2.75 percent per swiped transaction -  on both credit and debit transactions, so long as users sign up before October 31. The special rate will be available only until January 1, 2016, at which point it will return to the standard 2.5 percent per transaction Amazon is charging (or 2.75 percent for manually entered transactions). Paypal currently charges 2.7 percent per swipe.

While the reader technically costs $10, that fee through Amazon is also essentially erased since Amazon grants users of its payment system $10 in transaction credit right off the bat. The reader is currently available on and is delivered within two days with free shipping.  Staples stores will also carry the devices, starting August 18. With this new reader, Amazon is obviously trying to lure real-world sellers away from the established competition with more attractive rates, but beyond that, it’s also boasting that Local Register is backed by Amazon’s customer support, a secure card reader design that “limits swivel” during swiping, and their existing secure infrastructure for accepting payments which is backed by all the experience of their online storefront.

Amazon's technology includes a card reader that attaches to a smartphone, Kindle or tablet. The reader processes credit or debit card payments via a secure Amazon network, the same one that processes purchases. The service is designed to serve on-the-go small business owners who might otherwise only accept cash or checks, including massage therapists, food truck operators and artists who sell their work at outdoor fairs.

Small businesses can start by creating an account online at Businesses must buy Amazon's card reader for $10, and download the free mobile app from the Amazon app store, the Apple app store or Google Play. The app works on most smartphones and tablets, including the Kindle Fire.

“For Amazon, it’s a strong strategic move in a category that’s doubling every three to four years in terms of revenue,” Burt Flickinger, managing director of Strategic Resource Group, a consumer industry consulting firm, told the Daily News.

The Mobile payment industry “is a high-margin business with low-margin competition and it’s an opportunity for Amazon to save shoppers and business customers a material amount of money,” Flickinger said.

"I've actually heard some business owners say the only thing that would make them change (point of sale) systems is cost savings," said Matt Swann, vice president of local commerce for Amazon.

"Payments are hard and that's one of the things that gets in the way of serving customers, especially for small businesses," Swann said. "Payment tools need to be inexpensive, simple and trusted to get the job done."

Amazon has been expanding into the payment space with other products recently, including Amazon payments, which lets users with stored credit card or banking information on the Amazon site use their Amazon login to pay at sites other than Amazon; and Amazon Wallet, a beta app that lets users store gift cards, loyalty and rewards cards and membership cards and redeem them in store or online.