Wednesday , July 18, 2018

Is Amazon Mulling a P2P Payment Function for Its Alexa Voice Commerce Service?

The mere hint that Amazon.com Inc. could add a person-to-person payments function to its Alexa voice-commerce service was enough early Friday to shave value off of the shares of PayPal Holdings Inc. and Square Inc., both of which offer P2P networks. At mid-morning, Square’s shares were down more than 3% while PayPal’s had dipped more than 2%.

Very little detail was immediately available about the possible Alexa service. Amazon executives are looking into the idea, according to “sources familiar with the matter” who talked to The Wall Street Journal. An Amazon spokesperson did not immediately respond to a request for comment from Digital Transactions News.

Amazon’s consideration of potentially adding P2P payments to its Echo devices makes sense, says Rick Oglesby, principal at AZPayments Group.

The Seattle-based company has in recent months added payment capability to Alexa through its Amazon Pay digital wallet, though this functionality is limited so far to transfers to businesses offering particular products or services. Alexa is a form of artificial intelligence that relies on voice commands that can be delivered to Amazon’s “Echo” devices deployed in homes or businesses. The service competes with Apple Inc.’s Siri and other such voice-command technologies.

The P2P payments market has grown fiercely competitive in the past year or so as major banks have entered the business with their Zelle service, which allows users to make instant payments to other persons directly from their demand-deposit accounts. PayPal’s Venmo and the Square Cash service are popular with young adults but require users to take an extra step if they want to move funds into their checking accounts.

Amazon has been talking to banks about creating a specialized deposit account its users could rely on for payments services, according to a report The Wall Street Journal published a month ago.

The news that Amazon may be mulling a P2P service for Alexa was not a surprise to some expert observers. “It definitely makes sense for Amazon. A payment service enables commerce growth,” says Rick Oglesby, principal at AZPayments Group, a Mesa, Ariz.-based consultancy.

But Oglesby adds that Amazon may find more potential business in making Alexa available as a sort of “bridging” utility for existing bank and non-bank payment systems. “Alexa can provide voice-recognition and security services to enable third-party payment services, making Alexa a hub into a wide variety of P2P payment services,” he tells Digital Transactions Newsvia email. “While Amazon could compete directly with Venmo, Square Cash, Zelle, and PayPal in P2P, it may be better served enabling those services and competing with Visa and Mastercard as a bridge between them.”

P2P transfers in the United States executed on mobile devices were expected to reach $156 billion this year, according to a forecast released by eMarketer last summer, double the $77 billion the firm estimated for 2016. The forecast took into account both bank and non-bank services.

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