How Amazon is becoming a major player in finance


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How Amazon is becoming a major player in finance
It was never about the books. Jeff Bezos may have launched Amazon as an Internet book seller, but he quickly turned the company into an overall ecommerce powerhouse. There's little that Amazon isn't in to these days - of course, they still sell books, but its tech unit, Amazon Web Services (AWS), is one of the leading cloud technology providers around, powering both large and small clients all over the world. Amazon's payments division is also ramping very quickly. In 2013, after a couple of starts and stops, the company relaunched  Amazon Payments, giving Amazon customers the ability to pay for products and services on other sites using their Amazon accounts. In a way, early Amazon Payments acted a substitute for PayPal or a credit card when account holders went shopping online. Amazon said this January that its transaction volume had grown 150 percent year over year in its payment division but hasn't given out a full reckoning of its activities in the payments space.

Integrating Amazon Payments in the ecommerce ecosystem

Like PayPal, Amazon is running the third party integration playbook as the next leg in its growth. Earlier this week at a European finance conference, the company announced it would enable merchants to integrate Amazon's payment tools into their own websites.  By giving Amazon customers the ability to log in, authenticate, and pay with their Amazon accounts, an ecommerce site can offer the same ease and use Amazon is renowned for. This gives Amazon a much broader footprint in payments, as merchants are certainly interested in reaching the nearly 300 million registered users Amazon already has. These customers wouldn't need to re-register or input payment information on merchant partner websites. They could just checkout with their existing Amazon accounts and payment information on file. In turn, this would speed the conversion cycle and boost revenues for ecommerce sites that integrate Amazon Payments.

Growing out Amazon Payments beginning with leadership

To spearhead Amazon's aggressive push into payments, the ecommerce firm hired PayPal's Patrick Gauthier last year. Gauthier has played a key role throughout his career in building and expanding new payment technologies, most recently at PayPal where he grew their prepaid business seven-fold in just 18 months as the firm's head of product strategy in retail services. Prior to PayPal, Gauthier spent 10 years at Visa spearheading next generation payment products and services. Gauthier now leads the expansion of Amazon Payments with merchant integrations. Regarding the program, he told Bloomberg, "Why would we make it easy for customers to buy elsewhere? Because we know it solves a problem in their life...It deepens our relationship with customers." Amazon's payments distribution strategy also has its payment functionality showing up in unexpected places. The firm's new voice-controlled virtual assistant device, Echo, recently integrated with Capital One to allow users to synch their Amazon devices to track and pay Capital One credit card bills. Amazon also developed and now markets Dash buttons which are small, one-button household wifi devices that when pushed, automatically order a single product from the Amazon website.

Payments + lending

Amazon has also been active in the online lending space. This program, which began as invite-only in 2012, provides capital to merchants who sell on Amazon. Loan sizes run from $1000 to $600,000, with payback periods ranging from 90-180 days and interest rates fluctuating between 6-14%. Amazon has leant hundreds of millions of dollars as part of its lending program and in the summer of 2015, announced it had expanded its lending to select European markets. Amazon's activities in the online lending and payments space have shown that that the ecommerce giant is serious about being a major player in finance. With strong roots in ecommerce, it makes sense that payments would be a smart initial foothold for the retail giant. But who knows, Amazon may move deeper into finance. Will we see the Bank of Amazon in the near future?    

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