Credit cards remain one of the most popular ways of making payments, both in-store and online. That being said, there is a fair amount of risk involved when making and accepting credit card payments, with fraud rates being far too high to make this a viable business model. Even companies like Amazon are forced to discontinue their credit card reader product line and service while competitors like Bitcoin gain in popularity.
Even Budget Credit Card Readers Aren’t Popular
Amazon’s credit card reader held a lot of promise, with a price point of just US$10. Dubbed the “Amazon Register”, there were some clear similarities between this product and Square Reader, both of which are targeting the same market. The main difference could be found in the fee structure, as Amazon Register charged between 1.75% and 2.5% per transactions, whereas Square charges 2.75%.
Small businesses would be the winners of this ongoing price war between Amazon and Square, as lower transaction fees would prove to be quite beneficial. Combine that with the low prices for these mobile credit card readers, and there were plenty of opportunities to grow a consumer base beyond expectations.
Unfortunately, Amazon has decided to pull the plug on their Amazon Register program. After only being in existence for slightly over a year, Register has been deemed a “failed experiment”. Purchasing the card reader is no longer possible and processing purchases will halt on February 1st, 2016.
The mobile card reader market is a cutthroat business and with plenty of competition in this “niche” area, chances of success are fairly slim for new companies. Undercutting rates is one way to tackle this problem, but it creates a whole set of new problems at the same time. Losing money is only viable for so long, even for companies like Amazon.
Additionally, there is the problem of gaining a critical user base to make this business worth exploring. Despite a low-cost device, combined with lower credit card process fees, Amazon couldn’t put two and two together successfully. Sustaining the Amazon Register business was all but impossible, and pulling the plug seems to be the right call.
Bitcoin is Still Far Superior For Small Businesses
Traditional payment solutions, such as credit and debit cards, are often criticized for their high transaction fees and their requirement of additional infrastructure to process these payments. Bitcoin payments, on the other hand, are subject to lower transaction fees, and require no additional infrastructure to start accepting the digital currency as a payment method.
For small[er] businesses, cutting down on as many costs as possible can be the difference between success and failure. Even though Bitcoin is not embraced by a “mainstream” crowd just yet, there is a clear demand for new and innovative payment options. Bitcoin is the cheapest option available on the market and can be used on a global scale at no additional cost.
Last but not least, Bitcoin payments can be made with mobile devices as well. Over the past 18 months, there has been an increase in the number of consumers experimenting with mobile payments. Because Bitcoin requires no additional cost for either consumer or retailer to be used as a mobile payment solution, this disruptive digital currency is the clear winner.
Source: The Verge
Images courtesy of Shutterstock, Amazon Register