Some time ago we outlined a new service that Amazon was launching that was targeted towards those who wished to shop on Amazon but did not have a “bank card.” We thought we would provide an update on how that program is proceeding.
The concept was based on consumers being able to add “cash” directly to their Amazon.com balance by having a barcode scanned at a participating retailer so that cash can be immediately applied to the individual’s online Amazon account.
The service will support adding any amount between $15.00 and $500.00 in a single transaction. The entire program is based on the belief that many in the general population “under-bank,” regarding the management of their personal funds. It is believed that an entire market-population works off of cash payments or by choice, do not have checking or saving accounts. Yet these consumers would still choose to make e-commerce purchases if given the chance.
Brick & Mortar Retailer Portals
This untapped segment of the consumer population has largely been ignored by the e-commerce industry. It has previously been simple logistics that created a barrier between these consumers and the digital marketplace. Without a bank card, there was no way to “tie” online transactions electronically to a reliable payment structure from the customer. Amazon Cash is the first wide-scale attempt to breach that barrier.
During the initial rollout of this new program the following retailers are Amazon Cash Portals that the consumer can visit to fund their Amazon.com account;
- CVS Pharmacy
- Kum & Go
- D&W Fresh Market
- Family Fare Supermarkets
- VG’s Grocery
While other stores are expected to be added as the program grows, it is important to note that the majority of the funding portals are retail chains that cater to the inner city for the most part. As the program expands, it is expected to make its way into the more rural markets as well.
A 2015 report from the FDIC said that at least 27% of consumers are made up of “underbanked,” or “unbanked,” shoppers. These are people who get paid in cash, don’t have a bank account, debit card or credit card. Subsequent reports and studies seem to show a trend expanding that number as undocumented immigration has continued to climb and these consumers reflect much of that purchasing paradigm.
While these shoppers have money to spend online at times, there hasn’t been an easy way to do so. Until the launch of Amazon Cash, they would have to buy an Amazon Gift Card in a designated amount or add cash to prepaid payment cards, to be used at checkout.
Even more broadly, the new Amazon Cash program may appeal to anyone who just wants to deposit some cash in their Amazon.com account without hassle. Additionally, with all of the concerns regarding the online “hacking” of accounts, Amazon Cash may enhance consumer comfort as it pertains to their digital security as well.
Since the launch of Amazon Cash, some interesting analytical data has accumulated. It appears that many people who are using Amazon Cash do have bank accounts and credit/debit cards. Since there are no fees associated with the program, it is a low-risk and zero cost way of making online purchases.
Due to the almost daily concerns associated with criminals hacking into a e-commerce account and mining bank account numbers, social security numbers and credit/debit card account numbers, to basically have a cash account that only places at risk the funds in it at any given moment is very reassuring to many digital shoppers.
Since the funds are available instantly once they have been loaded onto the shopper’s bar-coded account, there is very little hassle associated with this program. The customer can present the barcode for scanning on their Smartphone or they can print out the barcode on a piece of paper from their computer and bring it with them to the retailer who will take their cash payment.
The Bottom Line…
MosaicaFX would recommend to our clients who are digital marketplace Sellers that they explore the many products that may appeal to the consumer demographic that reflects minimal traditional banking shoppers and/or e-commerce consumers who are cognizant of digital security issues. These customers represent an untapped market potential that could expand revenue lines and increase profits.
Take a moment to schedule a call with one of our MosaicaFX Account Managers to discuss how you can protect your profits and expand your market base under this new Amazon Cash program. We are confident you will benefit from such a discussion today.