Amazon Going Brick-and-Mortar?

Amazon Local Register
Source: Inc. Inc. (NASDAQ: AMZN) announced the availability of a new payment system the company calls Amazon Local Register that sets the company into competition with many other providers of similar credit- and debit-card mobile device payment systems, of which the best-known is probably Square. Amazon’s program includes a $10 card reader that plugs into a smartphone or tablet and a free software app.

One reason for Amazon to enter this crowded field is that it will give the company some hard data on how U.S. customers shop and buy stuff in brick-and-mortar stores. For example, do people pay for meals and coffee mostly or do they also buy pots, pans, and coffee makers? And if they do buy more services, can Amazon promote and sell products at local retail shops that customers who buy a lot of meals at Mexican restaurants and drink a lot of lattés will buy?

It’s a tenuous link to the brick-and-mortar retail world, but Amazon will charge merchants a fee of 2.5% of the total value of the sale after a teaser rate of 1.75% ends in January. A 2.5% profit is nothing to sneeze at for Amazon. In the June quarter, revenues totaled $19.34 billion and net income was negative $108 million. Even when the company made a profit of $240 million in the fourth quarter of 2013, that represented a net profit of just 0.93%.

Investors seem to like Amazon’s plan, pushing the stock price up 2.75% in late afternoon trading Wednesday to $328.19 in a 52-week range of $279.33 to $408.06.

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