The report from TechCrunch today says that Amazon is rumored to enter the mobile payments game, offering a competitor to Square and PayPal. While the move would surprise absolutely no one (even Amazon knows that mobile is the future of commerce) it seems a bit disingenuous to me to ignore what Amazon has already been doing in the space.

Amazon’s Mobile Payment Service (MPS) has been a reality for quite some time. Though, for now, the focus has been on enabling Amazon Payments in mobile apps and on websites. To be fair, TechCrunch’s Leena Rao does mention Amazon Payments, but it’s that integration with MPS that makes the difference here.

As Rao notes, “Amazon could be offering a rate as low as 1.9 percent”, which falls in line with the existing payment structure that Amazon uses. Though the floor is pretty high for that 1.9-percent pricing, beginning at a three-month average of $100,000. In order to truly take on Square or even PayPal, Amazon would have to adjust this pricing somewhat drastically.

Screen Shot 2012 09 27 at 1.07.10 PM 520x160 Amazon already does mobile payments. Launching a Square challenger is simple logic

Nobody’s pretending that Amazon doesn’t want to be inside of physical stores (heck there are already lockers inside some stores for delivery and pickup). It’s somewhat of a last horizon for the company, which has often been credited with upending the retail industry in recent years. If the company were to simply produce a dongle (a la Square) or somehow work out register integration, it could be a massive blow to the credit card processing industry.

The current rates for credit card processing are exponentially higher than what Amazon is rumored to charge. I’m purposely avoiding the use of the term “standard rates” because it’s a bit of a fallacy. For many retailers, they’ll have different rates depending on how the sale is made (swiped versus entered manually, mail ordered, etc.) and some processors simply don’t work with some credit card companies. On top of that there are often holdback fees associated, in case of returns or disputes, which keeps even more money out of the hands of the seller.

Facing facts, people know the Amazon name. Even those who aren’t tech-savvy are familiar with Amazon, and that top-of-mind awareness could help to push the company faster than the famous-yet-still-new Square. It wouldn’t take much work on Amazon’s part to finish the physical checkout necessities and step its other foot into the market.

But then Amazon faces another issue – Recruiting the companies who are presently struggling because of its very presence. Unfortunately for Amazon, no amount of technology makes up for lost business and overcoming that stigma.

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