Midsize e-commerce merchants beware: Amazon is offering new discounts to retailers who use its online payments service.

Previously, online merchants using Amazon’s service paid about 2.9% of each credit card transaction plus 30 cents. As part of its experiment, Amazon is offering to negotiate lower fees with merchants making long-term commitments to use the service.

While the allure of a discount may be enticing, midsize merchants should proceed with caution. The deal could be harmful to their bottom line because it will provide Amazon with more visibility into an even wider percentage of their e-commerce data.

Amazon motivational sign
Bloomberg News

For instance, when Amazon sees what sells well on other sites, it can then work directly with suppliers to offer these products and undercut e-commerce websites.

So, what’s the alternative? To reduce friction and increase sales, retailers should instead offer the right mix of mobile wallets.

But, what is the best approach for mobile payment processing and how can merchants benefit from it in their e-commerce businesses?

A mobile wallet is software that stores customer payment details (credit card, bank account info, etc.) and enables easy purchasing.

Think Apple Pay, Google Pay, Masterpass or Visa Checkout. Without requiring shoppers to reenter card and billing details every time they make a purchase, those utilizing eWallets benefit from faster and more secure checkout experiences across devices.

This is the first in a two-part series on Dangelmaier's views on e-wallets and merchant adoption.

Ralph Dangelmaier

Ralph Dangelmaier

Ralph Dangelmaier is CEO of BlueSnap.