Amazon Breaks Into Competitive Mobile POS Market

Amazon’s already burst into the media selling, publishing and smartphone markets, and now it’s looking to expand it’s empire into mobile point-of-sale solutions. Though it’ll go up against many POS providers jostling for dominance, it’s generous pricing model for first-time users may give it an advantage.On Wednesday, Amazon released a mobile card reader called Amazon Local Register, which will compete with similar devices from companies like Paypal, ROAM and Square. Like the other products, the device works in tandem with apps for Google Android and Apple iOS, as well as the FireOS on the new Amazon Fire.

Merchants running Amazon Local Register can access the funds from transactions within one business day, though they’ll be able to spend them within only a few minutes on Amazon.com.

As with many of Amazon’s services, lower prices for quality services are the key to Amazon’s business plan. Retailers who sign up for the service by Oct. 31 will receive a highly competitive 1.75% transaction rate until the end of 2015. Once the promotional period ends, the standard 2.5% rate will still prove to be strong competition for devices like Square, which charges 2.75% per swipe.

The device itself costs only $10 with free two-day shipping, but retailers on the system will actually be reimbursed in credit later on for the initial purchase. Like it’s competitors, it looks like Amazon will also target small businesses and micromerchants with infrequent transactions and small amounts of revenue.

Unfortunately, Amazon’s reader lacks EMV support, which may skew things in favor of Square, which announced a dongle to support the use of the international integrated circuit cards which have been established as a US standard among card brands.

In an email, an Amazon spokesperson wrote that”While this card reader does not have EMV capability, we are looking forward to getting customer feedback and will continue to monitor industry requirements to ensure we are meeting those needs and creating solutions that help our customers.”

Some analysts are still puzzled by the oversight, but others believe that it’s part of Amazon’s plan to keep the device as cheap as possible until Amazon’s reader is firmly established.

“It’s interesting to see even more competition in the payment processing space. To compete with Square, Paypal, and others, they will need to add some type of value or stellar customer experience,” says Eric Catania, CEO of Digital Reality, Inc. “It’s also important to remember that all of these solutions are basically ‘cash register replacements’ and don’t offer complete omni-channel retail management tools for today’s retailers.”Amazon’s reader also lacks add-ons like time clocks, inventory management and other back-office tools that ShopKeep, Leaf and NCR Silver all incorporate into their systems, though these are more attractive to small and medium-sized business owners than the micromerchants Amazon is targeting.

Merchants will be able to track data like peak sales times, sales trends and other reports through Amazon’s service.