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Revolutionising Financial Services

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Online retailer Amazon has been making moves in recent years to enter the financial services industry, introducing a variety of platforms and products that focus on finance in support of its core retail business. While Amazon has made no moves so far to apply to become a commercial bank, the retail giant has approached financial services from almost every other angle. The focus at present appears to be building a portfolio of financial services that underpin and support Amazon users – both consumers and merchants – by encouraging and facilitating increased participation on the Amazon website. Such advancements in fintech are often keenly followed by businesspeople such as Matthew Ledvina, director for a fintech company in London which focuses on asset-backed lending.

Current Amazon Financial Tools

The financial services offered by Amazon at present revolve around three main goals: making it easier for merchants to access the services and sell more products, making it easier for customers to access the services and spend more, and reducing any frictions that may occur between buyers and sellers on the site. Along with this, Amazon has recently invested in several international fintech platforms – developing relationships in markets such as Mexico and India – in support of its core strategic goal.

Payment Services and Infrastructure

One area that Amazon has invested heavily in over the past few years is improving its payment services and infrastructure. Key priorities have included making payments frictionless for customers and more cash-efficient for the company. The latest iteration of payments services is Amazon Pay, which has evolved to make life easier for both merchants and consumers. Amazon Pay facilitates a payments network for both online and brick-and-mortar merchants, and now includes a digital wallet for consumers. This latest payment platform is the result of more than a decade of experimentation with functionality within the payments infrastructure at Amazon.

Amazon Cash

Amazon Cash is one of the newer payment services, launched by Amazon in 2017. Amazon Cash facilitates a ‘cash on delivery’ method of payment using either cash or gift vouchers, enabling customers to deposit cash at one of a number of partner brick-and-mortar retailers into their digital account, which they can then use to pay for products. Amazon Cash holds strong appeal for areas in the world where the population is unbanked or underbanked, as with this payment method there is no bank account required to be able to use the service.

Greenlight Financial

The Alexa Fund from Amazon participated in Series A funding for Greenlight Financial in December 2017, a service aimed at improving access to online shopping for children. Greenlight Financial offers a tailored debit card for children that parents can control using an app, where they can allocate funds and set spending limits. The core business of Greenlight Financial complements Amazon Cash’s growth initiative, which focuses on increasing penetration of young shoppers.

Amazon Lending

Since 2011, Amazon has been offering lending services to help small businesses with financing, working in partnership with a variety of global and local banks. Amazon also offers consumers the option of signing up for a variety of cards, including the Amazon Prime Store Card, Amazon Store Card, Amazon Visa and Amazon Reload. To help entice customers, Amazon offers a variety of rewards for the various cards, particularly for Prime members who can receive unlimited cashback of 5% on all purchases with the Amazon Prime Store Card.

Amazon has not yet entered the checking account or insurance businesses, but has been in talks with various banks and has shown an interest in insurance products, so these could be the next major steps into financial services for the online retail giant.