In 2014, Amazon entered the race of mobile card readers with its very own Amazon Local Register. The Amazon Local Register was a small, wireless card reader made for the US market and its major selling point was the very low fee it was charging.
Small businesses could use the reader to accept cards using an application that could connect to smartphones and tablets. Amazon’s card reader featured a comparatively low processing fee of 2.5% per swipe as compared to its competitor Square’s 2.75%. After promotions, the rate would drop even lower to 1.75% per swipe.
The reader was compact, easy to use, and had the potential of saving small businesses some major money.
A mere two years after its launch, Amazon Local Register joined Amazon’s long list of closed projects. In 2016, Amazon stopped the sale of the $10 card reader. By February 1st, businesses were no longer able to process credit cards through the Register.
One of the most obvious reasons for the discontinuation of the register could be its unprofitability. The business of mobile card readers operates primarily on the razor-thin margins earned through the processing fee. By minimizing the processing fee to undercut competitors’ rates, Amazon was most likely losing a fair amount of money on its card readers. Amazon may have been planning to make up for that loss by earning a massive user base. However, the reader didn’t become popular enough to sustain the business.
Perhaps this was due to its software which users found slow and cumbersome. There were also complaints about the signup process which often required calling customer support and faxing information to the company. As Amazon failed to address these issues, it fell short of becoming a viable contender in the card reader business.