Amazon Pay Places is well positioned to take on Apple Pay and fill a gap in the highly fragmented mobile payments market, according to report from Fung Global Retail & Technology.
The report noted that Amazon Pay had 33 million users as of February this year, and 133 retailers accepting the platform online. Meanwhile, Apple Pay is believed to have about 87 million users, but its nature as a closed system that only works on iOS devices leaves it vulnerable, Fung said.
The broader U.S. payments market represents a large target for Amazon, with consumers having completed 33.8 billion credit card transactions in 2015, for a total value of $31.6 trillion.
This report follows news last month suggesting that Amazon is running a pilot program for Amazon Pay Places with several TGI Fridays restaurant locations on the East Coast. the speculation from the start has been that Amazon could quickly roll out this service to include many other restaurants and retailers, though Amazon has not yet made its plans for Amazon Pay Places clear.
Bringing the mobile app-based feature to retailers would put it in direct competition with a variety of other mobile payment platforms — not only Apple Pay, but PayPal, Android Pay, Samsung Pay, Chase Pay and others. Yet, a toe-to-toe payments battle with Apple Pay seems to be the fight everyone is excited about.
Amazon has 310 million active customers and at least 80 million loyal Prime members, points out Fung. About half the Amazon Pay users are reportedly Prime members and Amazon Pay overall has been used in 179 countries so far, all of which gives it unique scale to take on Apple Pay and ramp up usage of Amazon Pay Places.
Apple has hundreds of millions of devices in circulation that support Apple Pay, and has a pretty good head start. Yet its closed ecosystem could limit its future growth, while Amazon theoretically could expand its reach through partnerships and live on any mobile device with an Amazon mobile app — and 75% of the smartphones in the U.S. already have the app on board, according to Forbes. This could indeed shape up as a major battle, but one which neither Apple nor Amazon stands to lose. The losers instead, will be found in the fragmented mobile payments market that gets left in the shadow of these two giants.