Amazon sees Kindles as new checkout devices

The company plans to offer stores a payment system based around the tablets, according to reports.

By MSN Money Partner Jan 30, 2014 3:45PM
Credit: © Amazon.com, Inc.
Caption: Landscape view of the new Kindle Fire HD 8.9By Greg Bensinger, The Wall Street Journal

Amazon.com (AMZN) plans to offer brick-and-mortar retailers a checkout system that uses Kindle tablets as soon as this summer, people briefed on the company's plans said.


In one scenario, the Seattle company would give merchants Kindle tablets and credit-card readers, the people said. Amazon also might offer retailers other services, such as website development and data analysis, the people said.


To accelerate the project, Amazon last year bought certain technology and hired some engineers from GoPago Inc., a San Francisco startup that offered checkout systems linked to a smartphone app, the people said. GoPago is now a unit of DoubleBeam Inc.


Amazon's plans remain fluid and the project might be delayed, altered or canceled, they said.


The project would thrust Amazon, the largest U.S. e-commerce merchant, into the realm of physical retail stores, where more than 90 percent of commerce is still conducted, and open up a new trove of data from consumers' in-store spending habits.


But it would also inject Amazon into an increasingly crowded arena against the makers of traditional checkout systems, such as VeriFone Systems (PAY) and NCR Corp. (NCR), as well as startups including Square Inc., which offers a credit-card reader that attaches to tablets and smartphones.


EBay's (EBAY) PayPal unit is testing several ways of extending its strength in electronic payments into the physical world, including its own devices for swiping credit cards.

Because many of the largest physical retailers have extensive, complicated checkout systems that may be difficult or costly to give up, Amazon is likely to focus on smaller retailers.


Apple (AAPL) is moving into mobile payments and has been meeting with industry executives to discuss options for paying for physical goods on its devices. The iPad and iPhone have become popular payment-processing devices for an array of merchants, from food trucks to Nordstrom (JWN).


Amazon would bring strengths and weaknesses to the payment fray. It holds credit-card information from more than 230 million users, exceeding PayPal's 142.6 million. But Amazon has virtually no experience in brick-and-mortar retailing and merchants might be wary of doing business, and sharing customer data, with a competitor.


"The game of mobile payments is going to be won or lost at the physical checkout, that's where nearly all of commerce is done today," said Richard Crone, chief executive of Crone Consulting, a payments advisory firm.


To draw in merchants, Amazon has considered allowing them to offer promotions or discounts through Amazon.com or its Amazon Local daily deals offers, the people briefed on the company's plans said.


"At the end of the day, a merchant wants to make a sale, to drive up business. And if Amazon or anyone else can help them do that, that's tough to turn away," Crone said.


Amazon also might seek to create a so-called mobile wallet with stored credit-card information to help speed payments, two of the people said. The company last year rolled out a one-click digital button for processing online and mobile payments on other retailers' websites using Amazon customers' credit cards.


Amazon released the Kindle Fire HDX last year, the newest version of its full-featured tablet, touting security software that the company said could benefit businesses.


The Kindle is part of Amazon's broad hardware ambitions, which include a line of smartphones now under development, according to people familiar with the company's plans.


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