Amazon’s long ago shift into consumer electronics made it a rival to Google and Apple’s devices. [Hotlink]Amazon is also buying Whole Foods, challenging a variety of grocery store chains along with meal kit delivery service Blue Apron.
Now analysts say payment services like PayPal and Visa should watch their backs, according to Bloomberg. They believe that Amazon’s next move will be to push further into payments by promoting Amazon Pay, a service launched in 2007 for making payments online and on mobile.
“This scenario involves taking a page out of the book of what eBay did with PayPal and Alibaba did with Alipay, and building up independent wallet service based off of the Amazon Pay wallet,” Lisa Ellis, a Sanford C. Bernstein analyst, wrote to clients on Tuesday, Bloomberg said.
Amazon (AMZN) has already ventured into other kinds of digital payments. For example, Amazon Cash, introduced this spring, lets Amazon users add cash to their Amazon accounts and buy things online without a credit or debit card.
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Merchants that sign up for Amazon Pay can put the service’s payment button on their own websites so that customers can pay using their existing Amazon accounts. Similarly, last week, Amazon debuted Amazon Pay Places as a way for shoppers in brick and mortar retail stores to pay through Amazon’s app, according to tech news site TechCrunch.
Amazon Pay Places frees customers from having to use cash or a card, mirroring Google Wallet and Square Wallet, mobile services for storing debit card and credit card information. Instead of using cash or pulling out a card, users can pay for items using the digital information linked to a smartphone.
For Amazon, Pay helps to build brand loyalty with shoppers. The company also charges merchants a 2.9% commission on every transaction on top of a 30 cent fee, according to Business Insider.
In 2016, Amazon said 33 million consumers used Amazon payments to buy items online, according to Digital Transactions. In comparison, PayPal had 179 million active accounts in 2016, meaning Amazon still has some catching up to do.
Still, the mobile wallet business is expected to grow from today’s 7.5 million users to 29 million in five years, according to Berg Insight, a technology market research firm. That growth creates room for new competitors like Amazon to take on Google Wallet and other similar services.