Amazon Cash: Just Like a Gift Card, But Mobile

Amazon announced its new Amazon Cash offering this morning, alongside a list of participating retailers which thus far include CVS pharmacy and Speedway.

However, Amazon Cash seems to be  less of a mobile wallet, and more of an alternative payment method for consumers, who lack traditional ways to pay.

Unlike Square or PayPal or Apple versions, which link to customer bank accounts, Amazon Cash relies on actual cash; all a user needs is an Amazon account, and a smartphone.

Scott Harkey, payments practice lead for consultancy company Levvel, told Bank Innovation:

…it seems like an interesting idea, but not really all that different from just buying a gift card.  Clearly the most significant benefit of the program is the instant availability of the funds in your Amazon account; however, this only removes one step (loading the gift card to your amazon account) from the existing gift card marketplace. They’ve essentially created a digital gift card, purchasable with cash.

The process of using the offering does seems to follow many of the same steps as loading a gift card.

Amazon Cash works like this: a user will sign up for the offering, and choose to receive a barcode via a text message or by printing the code at home. The customer will then go to one of the participating retailers, like a CVS pharmacy, and show the barcode to the cashier, who will then use it to add cash to the user’s Amazon account balance.

This cash may then be used to shop on Amazon, just like a physical gift card. However, the process is now completed through a smartphone rather than a card, which ostensibly erases some of the effort involved.

It also allows Amazon to reach those consumers without access to traditional bank accounts, but as noted above, in a way quite similar to the process of loading an Amazon gift card.

According to Harkey, the most notable part of this new Amazon service is, well, that it’s an Amazon service:

 What is more impressive to me is the retailer network they lined-up to launch the product.  This shows you that the power of the Amazon brand extends well beyond their own site, as at least some retailers are eager to be part of the “Amazon” transaction.

What still remains to be seen is how Amazon is compensating these merchants and if that ultimately makes the cost of payment acceptance higher or lower than existing forms of payments such as cards.

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