Dubbed Local Register, Amazon’s Mobile POS Service Arrives

Online retail giant Amazon.com Inc. is moving into brick-and-mortar stores with the debut Wednesday of its Local Register mobile point-of-sale service.

Similar to other mobile POS services, such as Square Inc.’s, Local Register requires merchants to create an account, purchase a card reader and download an app to a compatible smart phone or tablet. Readers are $10 on Amazon.com, but merchants get a $10 credit on their transaction fees. Readers also will be available in Staples stores beginning Aug. 19.

Payment-processing rates for Local Register transactions, which include Visa Inc., MasterCard Inc., Discover Financial Services and American Express Co. credit and debit cards, are 2.5% for swiped transactions and 2.75% for manually-entered ones. That pricing undercuts Square, which charges 2.75% and 3.5% plus 15 cents, respectively. Amazon is the merchant of record for Local Register clients.

Merchants can use the iPhone 4 and newer smart phones from Apple Inc., three Samsung smart phones that use Google Inc.’s Android, and Apple’s iPad and iPad Mini tablets, in addition to Amazon’s Kindle Fire HD and HDX tablets.

In addition to payment acceptance, Local Register also enables merchants to view reports on sales, average transaction size, top-selling items and product categories and the busiest times of the day.

Amazon faces competition from merchant acquirers, independent sales organizations and other mobile POS companies. Some, like Square and PayPal Inc., a unit of eBay Inc., have similar products and distribution models.

Amazon says it launched the once-rumored mobile POS service because it “make payments easy, affordable and secure—so that local businesses and organizations can get back to serving customers,” an Amazon spokesperson says in an email to Digital Transactions News. Citing its other business services—Amazon Marketplace, Amazon Web Services and Fulfillment by Amazon in addition to Amazon Payments for e-commerce merchants—the retailer says it has a “long history of taking complex things and making them simple and affordable for other businesses. We talk to business owners every day and they tell us that they’d like a simpler, more secure and less taxing way to take payments. Saving money, secure transactions and customer service matter to them.”

Whether or not other retailers, especially brick-and-mortar ones, will view Local Register with a beneficent perspective is uncertain.

“More and more retailers do not trust Amazon,” Nikki Baird, manager partner at RSR Research, a retail industry consulting firm, tells Digital Transactions News. “I don’t see a lot of them getting excited about trusting Amazon with their transactions. The only angle I can potentially see on this is that maybe some marketplace sellers have been asking for it as a way to transact all their business— offline and online—through one provider, but I don’t see a lot of independent store retailers out there making the move to this payment method, and certainly not any independent book sellers.”

Significant, of course, is Amazon’s foray into payments inside stores, and the gateway that may provide to offering other services in stores, suggests Jordan McKee, an analyst at Boston-based Yankee Group. “The real lucrative opportunity is in the physical world,” McKee says of payments. “Point of sale is an entry point.”

Indeed, Amazon is not alone. Square has been bolstering its POS service, adding more functions. “We\'ve long been focused on building a complete register service for local businesses,” a Square spokesperson says. “This reinforces our mission and shows the demand for all of our services.”

And PayPal has been offering in-store acceptance at multiple merchants for the past couple of years. This strategy, which some acquirers have embraced but others have viewed with suspicion, includes the adoption of new technologies like Bluetooth low energy, a promising alternative to near-field communication (NFC) that links handset users with in-store payments and promotions systems.

“Square’s decision to start moving somewhat away from POS and broaden its suite of services looks pretty smart right about now,” McKee says. “The real opportunity is not around the payment acceptance component, but around services.” McKee says Amazon is not there with the initial version of Local Register, but he has few doubts that’s the direction it’s heading.

Merchant acquirers have views on Amazon Local Register, too. At Total Merchant Services, Shelly Plomske, vice president of product at the Woodland Hills, Calif.-based payment provider, says Amazon Local Register will aid merchant education.

“For us, it’s awesome,” she says. “There’s still plenty of runaway for folks like Total.” Even with the advent of the self-service POS distribution model, many merchants want a one-on-one connection with a sales agent, she says. Local Register likely will help familiarize the business community and consumers with mobile POS services, thanks to Amazon’s recognition, she says.

At Merchant Warehouse, a Boston-based merchant-services provider, chief executive Henry Helgeson suspects Amazon has more to reveal with Local Register. “If you look at payments, it’s a highly commoditized business,” Helgeson tells Digital Transactions News. “It doesn’t add a lot of value when it’s just payments.”

Amazon, he says, likely is eyeing the ability to provide business-management services to small and mid-size businesses, especially for merchants using Kindle devices. Amazon might be able to move orders to merchants, and gain local distribution. “I don’t think that’s anything anybody in the payments industry is prepared to compete with.”