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Amazon Cash opens up underserved market

  • Amazon just launched Amazon Cash, a way for customers to go to retailers and top up their Amazon accounts with cash at the retailers' point of sale.
  • The move is a means to grow Amazon's reach among the underbanked and a nod to the continued resilience of cash, analysts say.
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Over 20 million Americans who don’t have bank accounts can now shop on Amazon using cold, hard cash.

Under the company’s newly launched Amazon Cash program, the customer presents an Amazon barcode to the retailer, and they can load up to $500 in a single transaction with no fees. The money can then be used to shop on Amazon.com. Right now, customers can load cash at retailers like CVS, Speedway, Kum & Go, D&W Fresh Market, Sheetz, Family Fare Supermarkets and VG’s Grocery.

Buying a gift card was the only way a cash customer could load money onto an Amazon account previously. Amazon hopes this will help the company penetrate deeper into the underserved market by offering this fee-free incentive to transfer cash to an Amazon account.

“Amazon is realizing that to grow, they’re going to have to reach out to new demographics and new targets such as the underbanked that can now take advantage of the benefits of e-commerce,” said, Brendan Miller, principal analyst at Forrester Research. The move can also be seen as a nod to cash’s continued resilience.

“While the growth of digital commerce is relentless, cash is not going away and remains important for many customers,” said Zilvinas Bareisis, senior analyst at Celent.

Amazon Cash is similar to PayPal’s My Cash, which allows customers to top up their accounts with cash. Bank offerings for the same consumer market, such as Chase Liquid and the Citi Access Account, aren’t entirely fee-free, with a $4.95 monthly fee for the Chase Liquid card and qualifying deposit requirements to avoid a $10 monthly fee for the Citi Access Account.

As the underserved market gets more competitive, it’s a space banks can draw some lessons from, said Miller. “Amazon’s motivation is to make the transaction simpler, easier and faster,” he said. “Anytime banks come out with one of these things, they never make it easy on the consumer.”

But Miller speculates that more could be at play here. By letting Amazon’s bar code interact with retailers’ checkout systems, that may open up future possibilities to use Amazon accounts to pay for cooperating retailers’ products.

“They’re getting integration [with point of sale systems] to load cash, but why not just flip the switch and make it available to burn cash as well?”

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