Amazon.com, Inc. AMZN is offering to negotiate lower charges and pass its discounts on credit-processing fees onto retailers that adopt Amazon Pay, according to a Bloomberg report.
The diminished rates are meant to entice retailers generally charged 2-percent fees on credit transactions and 24 cents on debit — and to draw them from competing payment services.
Why It’s Important
The service heightens competition in the digital payments space already squeezed by Apple Inc. AAPL's Apple Pay, Alphabet Inc GOOGL’s Android Pay and rival programs by Mastercard Inc MA and Visa Inc V.
Online payment facilitators accordingly plummeted on the report. Paypal Holdings Inc PYPL plunged as much as 3.5 percent and Square Inc SQ 1.7 percent.
What’s Next
Whether Amazon will expand the service beyond an allegedly small set of merchants is yet to be seen. As Bloomberg noted, Amazon is known to test such initiatives ahead of broader launches.
Check out the people and companies looking to disrupt the payments sector, as well as many others, at the Benzinga Global Fintech Awards on May 15 and 16.
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