Amazon Already Took Over Retail, But Could It Make a Run In Finance?
"Based on our findings, it's hard to claim that Amazon is building the next-generation bank. But it's clear that the company remains very focused on building financial services products that support its core strategic goal: increasing participation in the Amazon ecosystem," according to a report by Business Insider.
Other massive tech companies, such as Google and Apple, have also made moves to get involved in finance. However Amazon's methods are different, they are working independently from banks. These companies are entering the financial services industry to increase demand for their existing products. "In a sense, Amazon is building a bank for itself — and that may be an even more compelling development than the company launching a deposit-holding bank."
Amazon wants to make it easier for customers to pay, to ensure that there aren't complications between browsing and buying. The company offers different ways to pay at checkout, but it also launched its own payment method, Amazon Pay. Amazon Pay can be used at any of Amazon's partner retailers, like Brooklinen and Vineyard Vines. If a shopper uses Amazon Pay at checkout, Amazon earns a transaction fee.
Amazon is also testing payments in-store for consumers at its AmazonGo shops. These stores have a cashier-less "just walk out" checkout model. Shoppers swipe in using the AmazonGo app, a series of sensors and cameras track what they take off of shelves, and shoppers just walk out and are charged automatically.
Amazon also recognized that some consumers prefer to pay in cash, so the company launched Amazon Cash in 2017. Consumers in the US can exchange cash at CoinStar machines or at partners like Western Union and MoneyGram to receive an Amazon.com redemption code to then shop online. This allows the company to reach individuals who don't have access to debit or credit cards.
Lastly, the company created Amazon Lending to help sellers by offering loans to small businesses. Amazon Lending was launched in 2011, and in 2018 it partnered with Bank of America to offer loans to small businesses on an invitation-only basis. Since the inception of the lending branch, Amazon has issued a total of $5 billion in loans.
Amazon's different financial service offerings have allowed the company to emerge as a massive player in the retail and financial services industries.