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It's a clever business move for all involved. Amazon skips the credit card fees. The businesses working with them probably don't have to pay Amazon the money f

• samstave 10y ago
  Yep, such an interesting 'innovation' in fintech.... I wonder who will come from the woodwork to oppose this? Curious though; can you ELI5 who actually pays the interest? --- I met a banker the other day and I asked him simply "how does one actually found a bank" his reply; "Oh it's really simple, have $30,000,000 and you can create your own bank!" Simple!
  • StavrosK 10y ago
    > can you ELI5 who actually pays the interest? The bank that Amazon holds its money in. > Simple! Well, it is simple, it's a very straightforward method. Simple doesn't mean easy.
  • mabbo 10y ago
    > Curious though; can you ELI5 who actually pays the interest? ELI5: Lots of people have business ideas that can make money, but often they need to have a small pile of money in order to make more money. Let's imagine you are such a person. I lend you money to start your business, then your business makes lots of money, and you pay me back. That's a good deal for you, but not for me. Your business might not work out, and you might lose all my money. I'll still lend you the money, but I want you to pay me back more money since I took this risk for you. That's where the money paid in interest comes from. Similarly, you might replace 'start a business' with 'buy a house' or 'buy a car'. You don't have enough money to do so right now, but you know that your life will be improved by having these things, so you borrow money to do them. The people lending you the money won't do it for free. Less ELI5: Alternatively, the businesses holding this money for four weeks will estimate what the lowest amount they'll be carrying over the next 5 years will be, then just go and invest that amount in stocks, bonds, etc. Since their balance will never fall below that amount, the money is effectively an interest-free loan from Amazon that they use to make interest-earning investments with.
    • samstave 10y ago
      DUDE.... +11 thank you what a wonderful explaination
  • rdtsc 10y ago
    Yes I know someone who started a bank with some partners. I had the same surprise "What do you mean you can just start a bank if you want?". It is not as hot and happening as a startup, but it turned out pretty well. A lot of regulatory red tape though.
  • crispyambulance 10y ago
    I will come out of the woodwork to oppose it :-) It is not really an innovation. This is basically private money that can only be used at a particular store. At the dawn of industrial revolution large mills used to pay their workers with "scrip" -- a private type of cash that could only be used in company-owned stores. The company basically double-dipped: first profiting from the labor of the workers, then profiting from the mark-up on the goods and services "sold" to the workers. Once you put money in Amazon cash, it goes to Amazon and nobody else. It is no longer "cash" or legal tender if you can't use it wherever you want.
    • vollmond 10y ago
      True, but if you're going to use this, it would be easy to put together your purchase, use the barcode to add that much money to Amazon, then complete your purchase. Yes, it would probably be simpler over the long term to get a bank account or a credit card, but this is perfectly usable if someone is already planning not to do that.
    • rebuilder 10y ago
      My initial reaction, formed directly after readin "Amazon Cash" was similar to yours. This doesn't seem to be the devil I thought it would be though, since it's more analogous to gift cards than private scrip, IMO. Now, if you can use "Amazon Cash" in lieu of currency by, say, transferring it to other users at will, I'm right there with you - proprietary, private money is very creepy to me.
      • crispyambulance 10y ago
        Yeah, its not the devil. It is more or less a "refillable" gift card. It would certainly be good for handling the occasional piggy-bank windfall (although a coinstar machine is better for that). I worry, however, about financial products like this that get aimed at people who don't have bank accounts. They're a particularly vulnerable population.
        • samstave 10y ago
• gpawl 10y ago
  Sounds like a check card at Bank of Amazon, that maybe isn't a "bank" because of loopholes in the banking law.
  • jdmichal 10y ago
    They don't need a loop-hole. This is basically a semi-closed stored-value card, which are a grey area between debit cards and closed stored-value cards (think gift cards). https://en.wikipedia.org/wiki/Stored-value_card https://en.wikipedia.org/wiki/Stored-value_card
  • spangry 10y ago
    Yeah, the wording in the FAQ has me a little confused: 2) Where can I use Amazon Cash? We have partnered with thousands of stores across the country, including CVS Pharmacy®, Speedway, Sheetz, Kum & Go, D&W Fresh Market, Family Fare Supermarkets, and VG's Grocery with more retailers coming soon. A directory of all participating stores can be found at www.amazon.com/cash. Are they saying you can also spend your 'Amazon dollars' at those stores? Because then that definitely does sound like 'bank of Amazon'. It would be a logical way to get a slice of that sweet sweet payment intermediary industry pie. EDIT: And it would put them in prime position to collect data on their competitors' retail transactions...
    • JustSomeNobody 10y ago
      If you can't use the money at, say, CVS, what benefit is this to them?
      • aianus 10y ago
        Probably Amazon pays them 0-5% of the recharge amount. That's what they're saving on the credit card processing. Same as buying a Steam gift card at CVS or whatever.
        • JustSomeNobody 10y ago
          That's pretty low for something that may be a strategically bad idea for CVS.