In a move that will certainly cause friction across the card payments industry, Amazon announced a new service called Amazon Prime Reload, which incentivizes newcomers to the program to load funds using a debit card or bank account with a 2% cash back on purchases.

It’s designed to increase enrollment in Amazon Prime, the $99 per year membership program that provides discounts and access to a range of goods and services, including video streaming and two-day shipping. Prime Reload focuses on treating an Amazon account as a stored value account to decrease purchase friction and to reduce transaction costs.

Amazon Prime signage
Bloomberg News

To further incentivize adoption and storage of funds within Amazon Balance, 2% rewards are added to the consumer’s account only when they reload, not on a per transaction basis. The preset reload amounts displayed on the Amazon website are $50, $100, $200 and $500, with $100 highlighted as the default. Users also have the option of entering a custom amount.

The implications for card issuers and networks are significant.

Fewer card-based transactions reduces interchange, and those that do take place are the lower-cost debit or ACH transactions. The Amazon Prime Reload process also diminishes brand visibility within the Amazon checkout experience.

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