Amazon is the world’s largest online retailer. Originally a book seller, it has expanded to sell a wide variety of consumer goods and digital media as well as its own electronic devices. The giant of e-commerce, logistics, hardware, data storage, and media has an estimated 85 million subscribers in the US, equivalent to about two-thirds of American households.
Jeff Bezos, Amazon’s CEO and founder, wants to change how America pays for things. The enterprise is in talks with JPMorgan Chase & Co. and Capital One Financial Corp., a bank holding company specialising in credit cards, auto loans, banking and savings products, to create its own banking system. It would be another link in Amazon’s extensive web of ways to touch every aspect of people’s lives, with a focus on younger customers and on those without banking accounts and credit cards. For years U.S. policy makers have been unconvinced about allowing big companies to move into banking services, that may be changing. In fact, Keith Noreika, who served as Acting Comptroller of the Currency from May to November 2017, said that it’s time to reconsider whether the traditional separation between investment banking and commerce should be maintained. The separation is meant to “protect banks from the corruptive power of commercial ownership and protect the market from banks consolidating and wielding too much commercial power.” For banks owned by corporate enterprises there would be excessive lending into the corporate enterprise and its subsidiaries.
First of all, the move means Amazon will need to adhere to longstanding banking regulations, but the strategy could help the biggest online retailer lower fees it currently pays to financial firms: Visa and Mastercard, as well as other financial services corporation, typically collect 2 percent fees for each credit card transactions and 24 cents for most debit cards. If 15% of Amazon shoppers switched to its new account, the company would save $250 million a year in swipe fees, as stated by Bain. And according to a LendEDU survey, 45% of respondents were open to using Amazon as their primary banking account. In addition, introducing its own banking system could be potentially valuable to future banking partners, which could become able to offer loans at the right time. As a matter of fact, it will be easier for Amazon to target in a new way its customers. The goal of the firm is to increase the bond between clients and the producer itself, thus to garner loyalty which means that consumers continue to buy from the same shop.
Amazon already has few services related to the “financial field”. The ecommerce giant offers Amazon Cash service, that lets consumers add cash to an Amazon wallet and purchase items online without a debit or a credit card. By introducing this option, the world’s largest online retailer makes its entire inventory accessible to more than a quarter of consumers who might not otherwise be able to shop on Amazon. Furthermore, Amazon Pay is a service that allows consumer to use the payment methods already associated with their Amazon account to make payments for goods, services, and donations on third-party websites without reloading their credit-card information.
In conclusion, Amazon is a constantly changing business. As Daniel Ives, the chief strategy officer and head of technology research at GBH, told CNBC: "The underlying goal is to further grow Amazon’s Prime membership through cross-selling into existing J.P. Morgan customers and this could lead to more initiatives down the road".
Ilaria Pagliara
Jeff Bezos, Amazon’s CEO and founder, wants to change how America pays for things. The enterprise is in talks with JPMorgan Chase & Co. and Capital One Financial Corp., a bank holding company specialising in credit cards, auto loans, banking and savings products, to create its own banking system. It would be another link in Amazon’s extensive web of ways to touch every aspect of people’s lives, with a focus on younger customers and on those without banking accounts and credit cards. For years U.S. policy makers have been unconvinced about allowing big companies to move into banking services, that may be changing. In fact, Keith Noreika, who served as Acting Comptroller of the Currency from May to November 2017, said that it’s time to reconsider whether the traditional separation between investment banking and commerce should be maintained. The separation is meant to “protect banks from the corruptive power of commercial ownership and protect the market from banks consolidating and wielding too much commercial power.” For banks owned by corporate enterprises there would be excessive lending into the corporate enterprise and its subsidiaries.
First of all, the move means Amazon will need to adhere to longstanding banking regulations, but the strategy could help the biggest online retailer lower fees it currently pays to financial firms: Visa and Mastercard, as well as other financial services corporation, typically collect 2 percent fees for each credit card transactions and 24 cents for most debit cards. If 15% of Amazon shoppers switched to its new account, the company would save $250 million a year in swipe fees, as stated by Bain. And according to a LendEDU survey, 45% of respondents were open to using Amazon as their primary banking account. In addition, introducing its own banking system could be potentially valuable to future banking partners, which could become able to offer loans at the right time. As a matter of fact, it will be easier for Amazon to target in a new way its customers. The goal of the firm is to increase the bond between clients and the producer itself, thus to garner loyalty which means that consumers continue to buy from the same shop.
Amazon already has few services related to the “financial field”. The ecommerce giant offers Amazon Cash service, that lets consumers add cash to an Amazon wallet and purchase items online without a debit or a credit card. By introducing this option, the world’s largest online retailer makes its entire inventory accessible to more than a quarter of consumers who might not otherwise be able to shop on Amazon. Furthermore, Amazon Pay is a service that allows consumer to use the payment methods already associated with their Amazon account to make payments for goods, services, and donations on third-party websites without reloading their credit-card information.
In conclusion, Amazon is a constantly changing business. As Daniel Ives, the chief strategy officer and head of technology research at GBH, told CNBC: "The underlying goal is to further grow Amazon’s Prime membership through cross-selling into existing J.P. Morgan customers and this could lead to more initiatives down the road".
Ilaria Pagliara