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Amazon follows PayPal into mPOS for in-store presence

Amazon has reportedly acquired mobile payments company GoPago, signifying the online retailer’s heightened interest in the mobile commerce space and competing against other big players such as PayPal and eBay.

According to reports, Amazon is embarking on an “ambitious” project that will leverage GoPago’s mobile payments technology. GoPago offered both a consumer-side mobile wallet application as well as a merchant-side mobile point-of-sale system.

“What would happen if Amazon became a POS provider, especially for small retailers?” said Paula Rosenblum, managing partner at Retail Systems and Research, Miami, FL. “That’s a powerful differentiator.

“I’m already seeing them competing with PayPal,” she said. “I expect them to do it more. From a merchant perspective, I’m pretty sure they’ll undercut PayPal pricewise.

“That has always been Amazon’s MO – tonnage at low margin.  So they’ll do whatever they need to do to grab market share.”

GoPago is a startup with an iOS and Android app that lets consumers pre-pay for products before picking them up at a store. It also offers a tablet and smartphone point-of-sale system for merchants.

GoPago’s founders are from Italy but came to Silicon Valley to work on the startup in 2009. One of the company’s early investors was JP Morgan Chase.

The company positioned itself to compete against Square Register, NCR Silver and other mobile payment systems designed for merchants (see story).

By acquiring GoPago, Amazon will now be able to make its own efforts in the mobile POS space.

“Given GoPago’s history with cloud-based point of sale, and Amazon’s rapidly evolving Kindle, it would not be surprising to see a POS solution from Amazon in the near future,” said Jordan McKee, analyst for Yankee Group, Boston.

“GoPago saw limited success on its own, but Amazon has the potential to leverage GoPago’s existing resources to build out a more robust value proposition,” he said.

Amazon’s plays
Until now Amazon has been making some quieter moves in the mobile commerce space.

It offers a “pay with Amazon” option that a few merchants leverage on their sites. Gogo is one such merchant that leverages the checkout feature for its in-flight Wi-Fi.

This offering is very similar to way PayPal provides with its one-click checkout.

Amazon also offers in-app payments for apps that are sold through Amazon’s app store as well as an API that lets third parties sell Amazon products in their apps.

App users can shop for millions of physical Amazon products from within Android apps using the ecommerce giant’s one-click purchase experience and Amazon Prime shipping (see story).

Building up mcommerce
PayPal too has made the news with its recent acquisition of the engineering team from mobile app development and production environment provider StackMob. This move will help PayPal fine-tune any upcoming projects with mobile wallets and payments services.

With so many players competing for merchants and consumers, it remains to be seen if consolidation will turn out one leader in the mPOS space.

“Many companies with ecommerce roots are now looking at the physical world opportunity,” Mr. McKee said. “PayPal is rapidly expanding its bricks-and-mortar presence and it seems Amazon is now looking to do the same.

“Even Shopify is has set its sights on the in-store opportunity with a PoS solution announced earlier this year,” he said. “Companies like Amazon want to be in physical stores to expand their influence and play a greater role in omnichannel commerce.”

With the GoPago acquisition, Amazon may be set to roll out a solid offering, but it still has to win over merchants and consumers.

Consumers are still wary of handing over their personal and billing information to different wallet providers, and merchants are hesitant to sign on to a program without consumer adoption.

According to research from Forrester, 23 percent of North American online consumers would trust Amazon to provide them with a digital wallet. Thirty-eight percent would trust PayPal.

“The mobile commerce race will be a marathon and we are only in the beginning miles,” said Patricia Sahm, Ph.D., customer experience and channels practice lead at Carlisle & Gallagher, Charlotte, NC. “Amazon has hired some excellent payment talent and Jeff Bezos will go full bore when he has an idea he believes in.

“From Amazon’s perspective, they want to be in charge of the entire retail shopping experience and they want to give consumers the ability to shop on Amazon at any time,” she said. “Having their own capability to achieve both makes great sense.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York