Reports indicate that Amazon is holding preliminary discussions with JPMorgan Chase with a view to developing a checking account-like product meant for its customers. The discussions are however not limited to one financial institutions and the online retail giant has also approached Capital One Financial on the same.
According to sources the checking account-like product will be aimed at millennial customers. By having such a product Amazon will be in a position to cut the fees paid to financial firms. Amazon would also benefit from obtaining customer data with regards to their spending and income habits.
If the product ever sees the light of day, it would extend Amazon’s reach into just about every sector from entertainment to groceries to cloud computing. As they watched other retail businesses getting upended by Amazon banks have for a long time feared their sector would be disrupted too by the retail giant.
Besides Amazon banks have also feared other major tech firms such as Apple and Facebook might sideline them by getting into their line of business by for instance accepting deposits, offering financing or handling more electronic payments despite the risk of being exposed to additional regulatory oversight. Amazon’s new venture may however serve to reduce those fears.
“Why put up all the capital that’s required to run a bank and why pick up all the extra expense and headache of running a bank when you can go to a Chase and any number of smaller banks and have them license their bank?” Blue Leviathan’s managing principal, Ali Raza, told Bloomberg in a phone interview.
Other financial products
If all goes according to plan this will not be the first time Amazon is making a foray into the financial world. The Seattle, Washington-based e-commerce giant’s Amazon Pay for instance lets shoppers pay for items on 3rd party websites without having to reload their credit card information. Currently the payment service boasts of over 33 million users. And per a report compiled by research firm CB Insights, the online retailer has given small businesses loans totaling over $3 billion.
Additionally Amazon also has a pseudo-debit card known as Amazon Cash which allows shoppers to top up their Amazon Wallet as well as shop on the platform without having to possess a credit card. Last year the online retailer also launched Prime Reload which gives incentives to customers so that they can top up their Amazon balance by moving funds using debit cards. This way Amazon saves on the fees it pays to card networks.