The payments and digital wallet scene has grown rather crowded in recent years. Part of the blame for the epic fall of digital payment pioneers like PayPal (PYPL) and Block (SQ) has to go to the big FAANG firms, which are looking to capture a more significant chunk of the payments market.
Undoubtedly, global payments is a massive industry that everyone wants to get a piece of – and as the AI wars dominate Wall Street’s attention, it’s the financial technology and digital payments scene where a lot of the action could take place, as FAANG companies look to expand their portfolios of fintech offerings.
Already, both Apple (AAPL) and Alphabet (GOOG) have made good use of their massive networks to bolster their positions in the digital wallet scene. Apple is taking payments and fintech quite seriously, with various intriguing products (think the Apple Card and the new high-interest Savings Account) integrated alongside its wallet. Reportedly, Goldman Sachs (GS) is losing quite a bit of cash from its involvement in such products, and is looking to get out of the partnership.
Though Apple and Alphabet may get the most attention for their impressive wallets, it’s Amazon (AMZN) that appears to be stealthily positioning itself for a push of its own.
Amazon’s Payments Positioning is Impressive
Amazon Pay and Buy With Prime are just two services that have been gaining traction of late. The latter service (Buy With Prime) offers payments, fulfillment, and 24/7 support to merchants that have their own websites. Indeed, Amazon makes it all too simple for independent e-commerce firms to get all the services they need to build the ideal customer experience.
Recently, Amazon announced integration with the Canadian e-commerce platform Shopify (SHOP) – notably, just a few quarters after Shopify warned merchants not to use the Buy With Prime feature.
What changed over the course of a few months? Shopify is getting out of the logistics game with the recent sale of Deliverr and Flexport. If you can’t beat them, perhaps it’s a better idea to join them!
Buy With Prime on Shopify is a big deal that could help give Amazon payments a real shot in the arm as it looks to expand across new corners of the e-commerce market.
Up next, Amazon could be using its palm to push further into the realm of payments.
Amazon Palms Its Way into Point-of-Sale (PoS) Payments
Amazon plans to roll out hand-scanning technology across 500 of its Whole Foods stores, so that customers can pay with nothing more than their palms. It’s a futuristic concept that could help Amazon nibble away at the market share of Apple Pay and Android Pay.
For now, the tech is coming to Whole Foods and just a few other places. If all goes well, it could be coming to a wider range of brick-and-mortar locations. Indeed, tapping your phone may be too inconvenient two or three years down the road, if all you need is the palm of your hand to pay for your goods!
Further, Point-of-Sales (PoS) products – like those offered by Block – could be going the way of the dodo bird if Amazon’s palm tech hits the right spots with merchants and consumers.
But as impressive and intriguing as palm payments are, I’m not so sure it will take off in the same way that mobile payments did. Indeed, there are potential privacy and security concerns of having your palm print in Amazon’s databases.
Only time will tell if people voluntarily opt to tap their palms rather than their phones once the tech is available at your local Whole Foods. In any case, it’s clear Amazon is not afraid to innovate to increase its market share.
The Bottom Line
Amazon is a disruptor at heart, and it’s well on its way to becoming a juggernaut in the payments space – if it isn’t already. Over the next five years, Amazon seems best-positioned of the FAANG group to grow its share in the payments scene.
As Amazon goes after palm payments, look for Apple to keep expanding its digital wallet – perhaps with a dance partner who’s not Goldman Sachs.
