Amazon.com, Inc. (NASDAQ:AMZN) has unveiled ‘Local Register.’ It currently comes with a free app and merchants are charged a one-time fee of $10. Those who sign up before the end of October get a special rate of 1.75 % per swipe. This rate will be valid till January 1, 2016 after which it will go up by 0.75 percentage points to 2.5 % per swipe. CNBC’s ‘Squawk on the Street’ team talks about this new venture of Amazon and how it will affect current market leaders Square and PayPal.
“[Amazon] charging 1.75 is a full point below Square. That’s going to get some small business owners’ attention”, said journalist and Squawk on the Street co-host Carl Quintanilla referring to Amazon.com, Inc. (NASDAQ:AMZN)’s offer to charge merchants 1.75 % per swipe for purchases using Local Register whereas Square currently charges 2.75 % per swipe. The one-time fee of $10 will also be repaid as transaction credit.
Amazon.com, Inc. (NASDAQ:AMZN) is famous for luring customers by cutting charges policy. It had followed the same previously for Amazon Web Services, its extremely successful cloud offering for small businesses.
“They try a lot of different things out and they do typically come in and not just undercut but then continue to push prices down à la AWS, Amazon Web Services […]”, added market news analyst and Squawk on the Street co-host David Faber.
Now that most of the world is shifting to credit cards with embedded microchips, Square recently announced the launch of its chip-compatible dongle to keep up with the changing times. This gives Square one point over Amazon.com, Inc. (NASDAQ:AMZN) albeit for a limited time until the latter alters its current device suitably. The overall verdict is that Amazon’s Local Register will definitely give tough competition to existing services offered by Square and PayPal.