Amazon Credit Card Reader May Be The Answer To Square And Paypal

Amazon.com Inc. (NASDAQ:AMZN) may be looking to take on PayPal and Square with its own mobile card reading device.

According to internal Staples Inc. (NASDAQ:SPLS) documents, obtained by website 9to5Mac, Amazon may be planning to debut a credit card reader possibly as early as August. The hardware listed as “Amazon Card Reader” in the documents is among various mobile payment processing hardware that the Framingham, Mass.-based office supply chain plans to stock in its retail locations.

Currently, Staples stocks a variety of credit card readers such as PayPal's "Here" mobile card reader, Square Inc.'s reader and its own Staples "Mobile Register" reader, which all plug into a mobile device to process payments. The Amazon Card Reader will reportedly cost $9.99, matching the upfront cost of Square's own mobile card reader. That's less than the $15 Staples wants for PayPal's Here or its own "Mobile Register" card reader.

The Wall Street Journal in January reported that Amazon was looking into a physical payment solutions. The Amazon Card Reader could be a larger part of Seattle company's mobile strategy to complement its recently launched Fire Phone, which has received mixed reviews. The company's exact plans for its Amazon Card Reader remain unclear, but the launch of several mobile products by Amazon suggests that it may be looking more to the mobile users to drive future growth.

In addition to competing with startups like Square Inc., which offers a credit card reader that easily attaches to tablets and smartphones, Amazon would also be going up against traditional checkout systems, such as VeriFone Systems Inc. (NYSE:PAY) and NCR Corp. (NYSE:NCR). At the same time, EBay Inc.'s (NASDAQ:EBAY) PayPal unit is testing several ways to parlay its strength in electronic payments into the physical payment space, including developing its own devices for swiping credit cards.

Amazon would most likely focus on smaller retailers, sidestepping larger physical retailers, who might be reluctant to give up their costly checkout systems already in place. Apple Inc. (NASDAQ:AAPL) is also moving into mobile payments and has had discussion about options for paying for physical goods on its iPad and iPhone devices, the Journal said.

To attract merchants, Amazon has considered allowing them to offer promotions or discounts through Amazon.com or its Amazon Local daily deals offers, sources told the newspaper.

There’s no word on how much Amazon plans to charge in processing fees for users of its Amazon Card Reader. But if the behemoth online retailer uses the same model as with its Amazon Payments online payment processing solution, it may cost 2.9 percent of each transaction plus 30 cents. In comparison, Square and PayPal card reader products cost 2.75 percent and 2.7 percent per transaction, respectively.

Staples stores were instructed to wait until Aug. 12 to put up signage for the hardware stock, including the Amazon Card Reader, indicating the possibility of a mid-August release of the payment hardware, according to 9to5Mac. Amazon is also reportedly developing a fingerprint-based payment solution, which could compete with Apple's anticipated Touch ID payment solution and wallet app.

Amazon recently released its own digital wallet app for Android, available now as a beta through the Google Play Store as well as the Amazon Appstore. The Amazon digital wallet app currently only integrates with gift cards, but the company could eventually integrate the app with its other payment solutions such as the card reader.

Amazon declined to comment on the rumored card reader hardware.