People seem to be very confused at to who the target market is here. This isn't about bricks-and-mortar retailers switching to use Amazon as a payment mechanism

People seem to be very confused at to who the target market is here. This isn't about bricks-and-mortar retailers switching to use Amazon as a payment mechanism, it's about providing a payment services for the (largely) local service vendors who sell their services via Amazon Local (Amazon's daily deal platform). Powering the payments system will give Amazon the data to do far more dynamic pricing (something which they have a lot of expertise in) for their vendors on Amazon Local which is a win for both the vendors and Amazon.