Amazon Prime Reload
However, a deeper dive into the workings of the program — which offers 2% cash back when shoppers use a debit card or bank account to load an Amazon stored-value account — should give the card payments industry serious cause for concern.
The banks and card networks fought relentlessly with PayPal over the years against its use of a similar practice of using linked bank accounts to cut its own payment costs. Visa and its peers finally convinced PayPal to change its ways, but it seems now that this battle was fought on the wrong front.
If Amazon succeeds in convincing shoppers to use their Amazon Balance instead of a payment card, issuer revenues from Amazon will dip dramatically as the retailer shifts more reload volume to ACH.
But the softer implications may be more troubling longer term. Amazon Prime Reload effectively blocks brand recognition for networks and issuers in the Amazon ecosystem to visibility only at the point of reload. With the psychology of QSR gift card dynamics being used for reloading, it is plausible that Amazon will take this a step further and enable auto reload at a low balance threshold, effectively making the issuer and network entirely invisible.
Card networks and issuers will not only lose revenue and brand recognition, but will also lose transparency on consumer transaction behavior, shifting the balance of power in terms of customer data analytics back to Amazon.