Amazon.com Inc. is in talks with JPMorgan Chase & Co. and Capital One Financial Corp. about offering the tech giant’s millions of customers a product similar to a checking account, the Wall Street Journal reported.
The target is younger consumers and people without checking accounts, the newspaper said, citing people familiar with the matter. The strategy would help Amazon lower fees it pays to financial firms and give it a bigger window into customers’ income and spending habits, according to the report.
The offering, if it comes to fruition, would be yet another link in Amazon’s extensive web of ways to touch every aspect of people’s lives, from food shopping at Whole Foods, to reading or listening to books, streaming music and videos and its Alexa voice assistant. After upending other retail businesses including groceries and health care, banks have long feared they might be next.
The finance industry has been concerned that major tech companies, not only Amazon but also Facebook Inc. and Apple Inc., might try to sideline banks by handling more of their customers’ electronic payments, offering financing or accepting deposits -- even if those services open them up to more regulation.
Financial Forays
Amazon has already made forays into the financial arena during its transformation from a book store more than 20 years ago. Amazon Pay allows consumers to pay for products on third party sites without reloading their credit card information. More than 33 million people use the payment system, and Amazon has lent more than $3 billion to small businesses that sell on its platform since 2011, according to a research report by CB Insights earlier this year.
The ecommerce giant also offers a pseudo-debit card, Amazon Cash, that lets consumers add cash to an Amazon wallet and purchase items online without a credit card.
And last year, Amazon dipped its toes into the deposit business with Prime Reload, which gives customers a 2 percent bonus when they use their debit card to move funds from a bank account to an Amazon balance that they use for transactions on the website. The move means Amazon paid less in fees to card networks like Visa Inc. and Mastercard Inc.
Fintech Collaboration
“It seems like another example of fintech collaboration with existing banks rather than a true disruption,” Guy Moszkowski, an analyst at Autonomous Research LLP, said in an email.