The wrong elephant in the room - Mobile World Live

The wrong elephant in the room

05 SEP 2012

By Richard Handford

Amazon has a press event scheduled for this week (6 September) at which the rumour mill predicts a number of announcements from the internet giant including a new Kindle Touch e-reader, the latest Kindle Fire tablet and various additions to its Prime service that offers a flat-rate fee for unlimited two-day shipping and other perks. Even a smartphone has been mooted.

However, no one is suggesting that Amazon is about to unveil a mobile payments strategy at the event. Maybe they should (and maybe they will, in which case I will be embarrassed). In contrast much has been written about whether or not Apple is preparing to announce later this month an NFC-based mobile phone and other moves into payments. Even allowing for the obsessive interest in Apple’s every move, such an oversight of the internet retailer is curious.

Consider Amazon’s qualifications in the payments market. It has scale, as evidenced by its huge database of customers’ credit card details, plus it is very good at managing the checkout process as well as being an expert in running cloud-based infrastructure. And it has a solid brand based on consumers’ generally positive experience of its reliability.  

Like Apple, Amazon already has a mobile device on which its users make purchases. But like the iPhone, the Kindle is used only for buying electronic goods (e-books) and not physical goods.

So if Amazon’s credentials are as good as Apple’s then why the oversight? Perhaps it points to a wider trend: That the potential role of retailers in mobile payments has been under-rated.

“Retailers will play a bigger role in mobile payments than it appears today,” says Dave Birch, a director of Consult Hyperion, speaking to Mobile Money Live.  The recently-announced MCX venture involving Wal-Mart, Target and others confirms a prediction Birch made some time ago about retailers coming to the fore in this area.

Surely physical retailers are different from the likes of Amazon? “I have a suspicion that these things will converge. The offline versus online distinction will become rather artificial,” says Birch. In both cases, payments are moving into the cloud.

A more meaningful distinction he suggests is between those companies which carry out mobile payments in the cloud, and those where the transaction is managed on the handset.

Mind you Amazon is not always best friend to bricks-and-mortar retailers. It offers an app that enables users to scan a product’s barcode when out shopping and then see whether it costs less on Amazon. That is hardly the kind of service to endear the company to retailers.

And with Amazon Prime tipped to move towards next day delivery, the advantage currently held by retailers in terms of instant gratification is further eroded. And that ultimately may be a determining factor: Amazon might not feel the need to enter the physical world when they are doing so well at subverting it with an online model.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.


Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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