This is basically a rip off of level up's app/idea
Apple has been offering a similar "iTunes Pass" feature since 2014 [1].
Amazon Cash
181–190 of 206 posts
Re: Amazon Cash
#182Earlier quoted context omitted.
Probably Amazon pays them 0-5% of the recharge amount. That's what they're saving on the credit card processing. Same as buying a Steam gift card at CVS or whatever.
That's pretty low for something that may be a strategically bad idea for CVS.
It would be a strategically bad idea if CVS did allow purchases with Amazon bucks. I'm assuming the FAQ is just badly worded, because I couldn't imagine CVS making such an awful strategic blunder. It would be bad for CVS because:
- Amazon would be able to see what CVS customers are buying, for what price and in what combination. That would make it pretty easy for Amazon to pick off CVS customers.
- If a large enough percentage of CVS' sales were settled in Amazon bucks, it would put Amazon in a position where they could 'tax' one of their bigger retail competitors by jacking up 'transaction processing' fees.
You really don't want to be reliant on a wholesale monopolist who also happens to be a retail competitor.
Re: Amazon Cash
#183Earlier quoted context omitted.
I don't know what a "lower middle class neighborhood" is like but when I worked at McD's quite a few of my coworkers expressed "I don't trust banks" sentiment.
Yeah, I have no idea what he's talking about. I know that people get their kicks by pretending like Americans have a nightly ritual of peeling the toenails off the nearest poor person and grinding them up for use as seasoning, but we're stretching the limits of believability here. Check writing became popular in the late 80s and early 90s. Checking accounts were widely available by the mid 90s. I personally know seve…
"I don't trust banks" can be an euphemism for a number of things beyond the actual dislike of the US banking system (which, as you correctly pointed out, is irrational).
Prevalence of cash-based compensation, under-reporting income for various tax and benefits purposes, outstanding child support, unpaid debts, fines, outstanding collections (or disputes with collection agencies) - a variety of reasons that all lead to a feeling of control with cash in hand vs. feeling of loss of that control when an electronic number is suddenly eaten up by various ACH pulls and garnishments.
Re: Amazon Cash
#184Earlier quoted context omitted.
Having grown up in a lower-middle class neighborhood and lived among people who the OP was speaking about, I can assure you that they were not "unbanked" or "underbanked" because of any sort of risk profile attached to banking. They didn't have checking accounts because they were generally unable to attain one.
I don't know what a "lower middle class neighborhood" is like but when I worked at McD's quite a few of my coworkers expressed "I don't trust banks" sentiment.
Many people "don't trust banks" not because they think there are elaborate conspiracies going on behind the scenes but merely because they think that the minute they slip up the banks are going to take advantage of them as much as they can. And they are almost exactly correct in that matter.
NSF fees are basically the equivalent of high-interest short-term loans. In some ways they are worse because the interest is assessed instantly and reducing your cash flow. Let's say you screw up and end up $5 off on your budgeting. OK, no big deal, maybe you take $5 out of your cash emergency savings (which might be, oh, $10 or $20) or you borrow $5 from a friend or family member until payday and you make things work. But if you have a bank account and you're off by $5 then you get hit with an NSF fee instantly. Now your bank account isn't just $5 in the hole, it's maybe $35 negative. So now you can't use it for anything until you come up with that extra $35, which is going to be more stressful to deal with. And then once you get things squared away after payday you're out that $30 for no perceptible real value. And that's assuming you don't get a cascade effect happening, which can easily happen if you're in a temporary money crunch.
If you're living close to the margins you can't afford to risk that sort of expenditure for no return happening every once in a while. Some people simply can't afford to live that way, it's easier to live on a cash basis. You cash your paychecks at the bank they were issues or you go to a walmart and you pay a bit of overhead. You pay your bills in cash or via money order or cashier's check. It'll cost a bit to live that way, a lot more than $30 a year generally, but it's predictable and it's under your control.
Re: Amazon Cash
#185Earlier quoted context omitted.
Yeah, the wording in the FAQ has me a little confused: 2) Where can I use Amazon Cash? We have partnered with thousands of stores across the country, including CVS Pharmacy®, Speedway, Sheetz, Kum & Go, D&W Fresh Market, Family Fare Supermarkets, and VG's Grocery with more retailers coming soon. A directory of all participating stores can be found at www.amazon.com/cash. Are they saying you can also spend your 'Amazo…
If you can't use the money at, say, CVS, what benefit is this to them?
Amazon is selling a service that is sold at, say, CVS. And CVS makes a profit off of that service. CVS gets all of the cash, Amazon ends up with most, but not all, of it. Traditional credit card companies can charge somewhere in the realm of 1-3% or so on transactions, so imagine that CVS retains a similar or lesser cut.
Re: Amazon Cash
#186Earlier quoted context omitted.
Yep, such an interesting 'innovation' in fintech.... I wonder who will come from the woodwork to oppose this? Curious though; can you ELI5 who actually pays the interest? --- I met a banker the other day and I asked him simply "how does one actually found a bank" his reply; "Oh it's really simple, have $30,000,000 and you can create your own bank!" Simple!
I will come out of the woodwork to oppose it :-) It is not really an innovation. This is basically private money that can only be used at a particular store. At the dawn of industrial revolution large mills used to pay their workers with "scrip" -- a private type of cash that could only be used in company-owned stores. The company basically double-dipped: first profiting from the labor of the workers, then profiting…
This is a misplaced sentiment. If Amazon were trying to trap people into spending money at their store and forcing people to pay exorbitant Amazon prices, then maybe this argument would make sense. But Amazon has a wide selection of products at low prices. And they'd be willing to let people extract their money and go use it elsewhere if it weren't for the pesky problems related to money laundering. There's really no reason to assume amazon is acting in bad faith or against the interests of people using this service.
Re: Amazon Cash
#187Isn't this Amazon taking a page out of Jack Ma's playbook? Never stop vertically integrating. You have to outscale everyone if you want to leverage that into slimmer margins. https://techcrunch.com/2015/06/25/alibaba-digital-bank-myban...
If taken at face value, that's what their FAQ suggests. I'm partially reposting a comment I made above, since you seem to be the only other person here who is thinking along the same lines as I am.
2) Where can I use Amazon Cash?
We have partnered with thousands of stores across the country, including CVS Pharmacy®, Speedway, Sheetz, Kum & Go, D&W Fresh Market, Family Fare Supermarkets, and VG's Grocery with more retailers coming soon. A directory of all participating stores can be found at www.amazon.com/cash.
Are they saying you can also spend your 'Amazon dollars' at those stores? Assuming the answer is 'yes', it means Amazon is looking to get a slice of that sweet sweet payment intermediary industry pie. But more importantly, they get these retailers' data for cheap and can figure out exactly where the marginal price for it lies. Think about it. These retailers might be paying Visa 2.5% transaction processing fees. Along comes Amazon who offer, say 2% fees (which might be roughly the rate they've negotiated for themselves with large payment processors).
Using CVS as an example:
Amazon start offering CVS customers varying rebates / fixed percentage discounts like: anything you buy from CVS with 'Amazon Bucks' only deducts 95% of your sales docket total from your 'Amazon not a bank account'. CVS will want their money either at point of sale or, at the very latest, through an end of day reconciliation. So in the interests of 'fraud protection' they will need to provide sales data to Amazon for those purchases. This is bad for CVS because:
- Amazon would be able to see what CVS customers are buying, for what price and in what combination. That would make it pretty easy for Amazon to gradually pick off CVS customers.
- I imagine Amazon would probably loss-lead for a while until they've become the dominant form of payment. If a large enough percentage of CVS' sales were settled in Amazon bucks (which Amazon can incentivise through rebates and discounts, hence the initial loss-lead), it puts Amazon in a position where they can 'tax' one of their retail competitors by jacking up 'transaction processing' fees.
I might be totally misunderstanding the situation here, and it's just a case of the FAQ being poorly worded. Otherwise, large retailers who sign up to this are committing a fatal strategic mistake (although I imagine the bean-counters would love it, not realising the long-term implications).
Re: Amazon Cash
#188This is another round of the "Amazon vs Walmart" war. People without banks or credit cards currently shop at Walmart. Now it is much easier for them to shop at Amazon.
"Much easier than before" or "much easier than at Walmart"? I buy the former, but I doubt that many of the cash-only customers shopping at Walmart live in locations or lead lifestyles conducive to receiving regular package deliveries easily. I'm skeptical that payment logistics are their biggest barrier to Amazon shopping. I suspect many of us on HN have a distorted view of how hassle-free online shopping is because…
Wow, that's very presumptive of you.
I lived for several years without a bank account and throughout that time I always had a home and a shipping address. Millions of people in the US don't have bank accounts. Not because they are vagrants or homeless but simply because they live too close to the margins to afford the potential economic chaos that having a bank account can cause.
Re: Amazon Cash
#189Earlier quoted context omitted.
I think it's more about getting to the segment of customers who do not have credit cards. There's no way amazon is paying the same fee as anyone else in the world for credit card fees, they're the single biggest e-commerce site and have almost certainly negotiated some substantial deals.
> There's no way amazon is paying the same fee as anyone else in the world for credit card fees I'm not so sure. Is there any actual evidence of large retailers negotiating down interchange fees? Even Walmart resorted to legislative pressure to regulate fees. The power of network effects is strong. Retailers are reluctant to drop support for consumer-preferred payment methods and lose that business. That gives card n…
Very large retailers do negotiate their fees but there's only so low they can go because different parts of the fee go to different entities along the chain (visa/mc, banks, merchant providers, etc.)
Re: Amazon Cash
#190Why wouldnt you just buy a gift card with cash at these stores?
Gift cards are a convoluted system that not everyone is aware of. This is simpler.