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HINTS OF AMAZON'S FUTURE IN PAYMENTS JUST BEFORE EARNINGS: After market close today, Amazon is holding its fourth quarter earnings call and while it may not focus specifically on Amazon's payments business we think there is reason to believe payments will be a big part of the company's strategy in 2014.
Here are four reasons why:
- Amazon could be making a bricks-and-mortar move. Yesterday, news broke that Amazon has loose plans to bring a point-of-sale solution to bricks-and-mortar retailers as early as this summer, according to the Wall Street Journal. The plan would involve retailers using Amazon's Kindle as a register with an added card reader. This would put the company in direct competition with PayPal and Square. The notoriously secretive Amazon has not made an official comment on the matter. (Wall Street Journal)
- "Login and Pay with Amazon" is going to be huge. E-commerce and mobile commerce are going to continue to grow as a percentage of retail shopping and as we noted in a recent report, the retailers that are going to win online are those that can provide a seamless shopping experience. Released in October 2013, Login and Pay with Amazon allows shoppers to pay for items on third-party retailers' e-commerce platforms using their Amazon ID. Because the feature is such a low friction method of payment, retailers will adopt it in hopes that it will increase conversion rates.
- Amazon has the mobile presence and ubiquity to make a great mobile payments app. In June of 2013, 57% of Amazon's user base used a mobile device to access the site. In addition, the company has over 224 million credit cards on file which are automatically linked to a user's mobile device when that user logs in to the Amazon app. One of the biggest difficulties in getting mobile payments to catch on is getting a lot of people to use one platform. Lots of people already use Amazon and a majority of those people already use Amazon on their mobile devices, so Amazon has a strategic advantage in comparison to many other players in the space. (BI Intelligence)
- Amazon may also be looking to get into peer-to-peer payments (P2P) soon. As TechCrunch reported, Amazon has active job postings up seeking candidates to work on a P2P product. Should Amazon introduce P2P payments, the move would likely be seen as a play to grab market share away from eBay's PayPal. But the P2P space is fairly crowded, and only getting more so. More on the latest P2P entrant further down in Payments Insider. (TechCrunch)
We'll have more details on Amazon's earnings call as it relates to payments in Payments Insider tomorrow.
STARBUCKS'S SCHULTZ FOCUSES ON PAYMENTS. During a conference call yesterday, CEO Howard Schultz announced that Starbucks's former CFO Troy Alstead will now fill the role of Chief Operating Officer. The creation of the new role is meant to relieve Schultz of duties having to do with day-to-day operations so that he can focus on digital and mobile payments, as well as the company's evolving retail experience. "I think the payments space itself is a very attractive opportunity for our company given the digital assets that we have … we'll be speaking more about that as time goes on," said Schultz. This sounds like Starbucks may be planning to expand its payments business beyond its own retail products. If this is the case, it wouldn't be surprising if Square plays a role in the expansion since Starbucks is invested in Square and Square handles a significant amount of payments processing for Starbucks. (Payments Source)
UPDATE ON THE TARGET DATA BREACH. The Target data breach was caused by an intruder who stole vendor credentials, reports ZDNet via the Wall Street Journal. According to the report, Target has said that the intruders hacked a system that was not related to its payments system. We'll keep following this story as it develops. (ZDNet)
THREE QUOTES FROM THE NEW YORK BITCOIN HEARINGS. Day two of the Bitcoin regulatory hearings wrapped up yesterday afternoon at the New York State Department of Financial Services (NYDFS).
Here are a few key quotes from the two-day hearing:
"If the choice for regulators is to permit money-laundering on the one hand, or to permit innovation on the other, we are always going to choose squelching the money-laundering first." - Superintendent of Financial Services Benjamin M. Lawsky.
"We believe that there should be more guidance specifically geared toward digital currency firms and that the states should develop a streamlined approach to licensing these firms." - Jeremy Allaire, chief executive of Circle Internet Financial.
"The Wild West attracts cowboys," said Winklevoss Bitcoin Trust Co-Founder Cameron Winklevoss. "A sheriff is a good thing. (NYDFS)
RIBBON GETS INTO P2P PAYMENTS. San Francisco-based Ribbon, which has so far provided e-commerce and payments processing solutions, is launching a peer-to-peer cash transfer service. The company decided to move into the space after it saw that many of its clients were using its products for personal payments in addition to business transactions. Ribbon faces stiff competition in the space from the likes of Venmo and Square Cash, especially considering that the company's new service is not yet available as a mobile app. (TechCrunch)
ONE-FIFTH OF GLOBAL PROCESSOR ADYEN'S TRANSACTIONS ARE MOBILE: Global payments processor Adyen released its latest quarterly global Mobile Payments Index today. The index is based off of Adyen's global payment transaction data. It shows that mobile transactions reached nearly a fifth of all transactions processed through Adyen in December 2013, up from 12.6% a year ago. The release includes breakdowns of payments volume by industry and device as well. (Adyen)
ZIMBABWEAN MOBILE OPERATOR LAUNCHES MOBILE CASH TRANSFER SERVICE. Yesterday, Telecel Zimbabwe announced the launch of Telecash which allows subscribers to send money to anyone on any network with their mobile devices. Users can also pay bills and purchase things like groceries using Telecash. Telecel Zimbabwe's network currently reaches 85% of Zimbabwe's 13.7 million+ people. Telecash was most likely inspired by M-PESA, a phenomenally successful digital currency offered by operators Safaricom and Vodacom and used by 70% of the population of Kenya. (Techzim)
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A Boom In Early-Stage Funding For Payments Startups Could Lead To A Slew Of Acquisitions In 2014
Netflix Prepares To Expand In Europe
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.