How the Amazon-Whole Foods Deal Impacts Payment Processing

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When news hit late last week that eCommerce behemoth Amazon made a proposed $13.7 billion to acquire Whole Foods, the impact for the payments industry wasn’t driving headlines. But hidden within the massive deal is one major question for a key element of this industry: What could this mean for the payment processing industry?

If you’re thinking to yourself: What does Jeff Bezos’ empire expanding into the brick-and-mortar supermarket industry have to do with payment processing? The short answer: A lot. One can make an assertion by now that anytime Amazon grows its footprint in another industry, it has a ripple effect on those companies already in the marketplace.

Let’s take, for example, when Amazon opened its first brick-and-mortar bookstore, a move criticized by plenty who didn’t think the eCommerce company had a place in the physical store world. But like most things Bezos puts his mind too (minus the costly Amazon Fire Phone flop), when Amazon makes a move, industries notice. During a time when storefronts are shuttering at a rapid pace, foot traffic is shrinking at big box stores, and commerce is shifting online, Amazon made a bold move to open bookstores — and has been expanding ever since its first launch in Seattle in 2015.

From there it was clear that Amazon’s evolution had gone full circle, and as a result, other companies would feel the impact. In the case of the bookstores, and what is likely to come if the Whole Foods deal goes through, this too could have a serious impact on the payment processing world.


Amazon’s Brick-and-Mortar Growth and the Payment Processing Effect

Whenever you want to know how a move by a major company like Amazon impacts the country, just check the stock markets. This was the case when Amazon’s proposed $13.7 billion deal hit the digital newsstands. As Reuters reported, across dozens of parent companies of supermarkets, food producers, payment processors and shopping malls, there was a $35 billion hit in the shares of those companies, collectively.

“The ramifications for all of retail are seismic – not just retailers that sell grocery, but for everyone,” Gordon Haskett analyst Chuck Grom was quoted in the Reuters report, which touched on why Amazon’s next move matters for so many industries.

Many analysts have suggested that Amazon’s latest move is a way to find a creative loophole into forming a new style of monopoly. Amazon has already shown through Amazon Books how it’s used its technology expertise to edge outdated, old-school payment processing companies. This also has a lot to do with what payments pundits like to call the “invisible payments experience.”

The payment processing experience at Amazon Books is actually easier than checking out online, even with the one-click checkout button. That’s because Amazon has employed the concept of Bluetooth smart sensors that pair with a customer’s phone (via the Amazon app) to enable a frictionless buying experience that allows them to buy a book without standing in line, handing over a credit card of talking with a cashier. Instead, the smart sensors handle all the work when a customer walks out the door — enabling a seamless retail experience. Amazon also empowers an omnichannel experience by allowing customers to shop in store, but then buy online.

That technology alone has the power to completely transform the world of payment processing in a way that’s been talked about for years but never implemented. The concept of a self-service kiosk at a grocery or convenience store has been about as advanced as the payment processing industry has taken us in recent years. And even that has its share of hiccups that still relies on a human to help smooth the payment interaction when errors occur.

Speaking of technology, Amazon’s latest venture (if the deal goes through) proves that the traditional bricks-and-mortar stores, and even big-box retailers who have been shelling millions into their omnichannel and online commerce efforts, isn’t enough to keep Amazon from taking over its turf. Why? Amazon simply has found a way to make a commerce experience easier, faster and cheaper for consumers.

A lot of that has to do with the payments, the impact on traditional payments processors and how consumers will think about the concept of paying while in a physical store (or online). Of course, it’s too early to tell what impact Amazon buying Whole Foods would have on the technology used in stores. Because of that, there are still a lot of questions left on the table.

Would Amazon use its payments processing tech to overhaul Whole Foods’ current system?

Would Amazon enable smart sensor technology to make it easier for shoppers to checkout without actually paying a person?

Would Amazon add subscription billing into the process by overhauling Whole Foods grocery delivery through Amazon’s expanding logistics plans?

Could Amazon shake up the entire payment processing industry by putting its Amazonian-touch on the process?

A lot of questions here, and not quite enough answers will be known until this deal goes through and Amazon actually starts putting its own mark on the store. One thing is clear, pending this deal does go through Amazon has just shown how quickly and easily it can change virtually every industry in one major purchase — including payment processors and the payment processing industry. This also will have a drastic impact on the value of cashiers and having people to physically run payment processing terminals.

Although Amazon has come out and stated that it has no plans to use its Amazon Go technology for Whole Foods, that doesn’t mean Amazon won’t try and overhaul the store’s payment processing in a way that benefits Amazon’s own payments arm.

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What This All Means For the Future of Retail and the Payment Processing Industry

The first speculation you could make about the Amazon-Whole Foods deal is that it’s going to greatly impact the concept of omnichannel. Because of how Amazon’s model is already set up, it’s an easy assumption to make that Amazon would combine its in-store shopping, online ordering and on-site pickup, and home grocery delivery — all of which could be powered by an app. It’s already got the logistics connections and is rapidly expanding its warehouse presence across the U.S.

For retail, this could be a game-changer and make it harder and harder to keep up with Bezos’s empire that’s quickly touching every market. Not to mention the fact that Amazon already owns its own online payment service, Amazon Pay. Amazon could begin to edge out the competition on the grocery side through its connections and could find advantages in the payment processing industry. This could allow Amazon to have better control over how the price of processing payments impacts it physical store presence, like Whole Foods.

Amazon Payments, which encompasses Amazon Pay and Amazon Pay Express payment services that are also leveraged by other third-party retailers, is quickly making a name for itself in the payments processing world. Although Amazon is an eCommerce company, its latest foray into the retail world has caused many to continue to classify Amazon as one of the world’s largest retailers. As it expands its retail presence, it’s only logical that its payments presence also expands.

Because Amazon also has its own co-branded credit card, there’s a solid argument that this could impact payment processing fees at places where Amazon has an ownership stake. Amazon has also recently gotten deeper into the world of debit card rewards through programs like Amazon Prime Reload, which also could shake up the payment processing industry.

For Amazon Payments and the world of payments processing, it’s pretty clear by now that Amazon wants to expand its products and services as far and wide as Bezos can grow his eCommerce and retail empire. It’s only logical that payments and payments processing be integrated into every expansion Amazon makes. If the eCommerce giant integrates its cash-back rewards program for purchases bought at Whole Foods, that could also shift card spend toward its products. There are also questions remaining about how Amazon might integrated Amazon Cash, which allows customers to pay at a number of retailers, via a barcode that’s linked to their Amazon account.

The end result? Supermarkets will have to disrupt themselves, and how the manage payment processing and the customer experience. Many companies will also have to re-evaluate how technology fits into their business model. Otherwise, Amazon will continue gaining more market share, inject more of its payment processing industry tech into the market, and truly earn the title of world’s largest retailer.

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Anna Kragie is a content contributor for Payline Data. She previously wrote for, as a Sr. Content Producer, where she focused on financial services and payments innovation, fraud and security, emerging payments, and FinTech news, research and thought-leadership content across the payments industry.

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