Amazon has launched a Square and PayPal Here competitor called Local Register, which provides users with a free app and a $10 card reader, and charges merchants and anyone selling services who use it just 1.75 percent per swipe on both credit and debit transactions, so long as users sign up before October 31. That’s a special rate, and is a full percentage point lower than Square’s 2.75 percent per swiped transaction (3.5 percent plus 15 cents for manual entry), and will last until January 1, 2016, at which point it will return to the standard 2.5 percent per transaction Amazon is charging (or 2.75 percent for manually entered transactions).
The $10 fee Amazon is charging for people to buy its reader is also essentially erased since Amazon grants users of its payment system $10 in transaction credit right off the bat. Amazon is clearly hoping it can lure real-world sellers away from the established competition with more attractive rates, but it’s also boasting that Local Register is backed by Amazon’s customer support, a secure card reader design that “limits swivel” during swiping, and their existing secure infrastructure for accepting payments which is backed by all the experience of their online storefront.
Payments received through Local Register go into a seller’s bank account the next business day, and Amazon makes funds available to use on its own ecommerce portal almost immediately. It’s a clever way to funnel some money back into its ecosystem.
Square recently announced an EMV chip card reader that would be coming to the U.S. soon, so that might give it a temporary edge over Amazon, but Amazon can move quickly to iterate on its product when the time comes. Overall, this could be a big challenge to Square and PayPal’s local payment efforts, depending on how aggressively Amazon decides to go after winning over users of its competing services.