All,
This is from today's WSJ. I thought CKFR was working with amazon.
AE
Amazon Sets Deals With Target, Citibank
As Slump Hits Market for E-Commerce
By NICK WINGFIELD and AMY MERRICK
Staff Reporters of THE WALL STREET JOURNAL
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Amazon.com Inc., in a split from the credit-card companies that process most of the Internet retailer's purchases, has joined forces with Citigroup Inc.'s Citibank unit and is offering an online-payment service that doesn't require a credit card.
Separately, expanding its partnership with Amazon, retailer Target Corp. agreed to turn over the customer-service and distribution operations for its Target.com Internet site to Amazon early next year.
Amazon, based in Seattle, said the Amazon Credit Account is roughly equivalent to the department-store credit cards offered by many traditional retailers, except that Amazon and Citibank won't actually issue a plastic card to customers. Once a month, the companies will send an account statement to customers, who will then pay their bills with a check or, eventually, through a deposit from a bank account.
In a sign of its ambitions for the payment scheme during the crucial holiday season, Amazon is offering customers who sign up for a credit account three months of no payments and no interest on orders over $200 placed before Jan. 31.
Analysts said the payment service is a sign that Amazon is using its influence as the largest online retailer to find lower-cost alternatives to credit cards.
Visa International and MasterCard International, the two dominant credit-card associations, typically charge online retailers a higher transaction-processing fee than they do physical merchants where a plastic card is used during the transactions, largely because of high incidences of payment fraud on the Internet.
While Amazon won't confirm how much it pays to process credit-card purchases, Avivah Litan, vice president of payment services at the Gartner Group market-research firm, estimates the company may pay 2.25% of the value of purchases in credit-card fees, compared with between 1% and 1.5% for most bricks-and-mortar retailers.
Rene Pelegero, director of global payments at Amazon, confirmed that Amazon's credit-account transactions will cost less to the company in processing fees than what it pays for customer's credit-card transactions, though he declined to specify how much.
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Mr. Pelegero said Amazon is "still getting lumped into that broad category" of merchants who pay higher credit-card fees because of a greater risk of fraud, despite the fact that Amazon has invested heavily in preventing fraud. "We continue to work very hard with" credit-card companies, he said, "to address some of the issues related to pricing."
Representatives from Visa and MasterCard weren't immediately available for comment.
Meanwhile, as its sales growth has slowed, Amazon has increasingly looked to arrangements with other retailers to bring in fees and new products. By paying for Amazon services and technology, Target will shoulder some of the expenses that have pressured Amazon's bottom line.
"We have put so much fixed cost into our business, and one of our big costs is software development," said Jeff Bezos, chief executive of Amazon.
The two retailers announced a deal in September to jointly sell merchandise over the Internet. The partnership brings an Amazon area with books, music and movies to the Target site. Amazon also began selling clothing, jewelry and other products last week in a Target-branded store on the Amazon site.
Target plans to find other Internet responsibilities within the company for employees who work on operations that will shift to Amazon, said Gerald Storch, vice chairman of Target, based in Minneapolis. About 1,000 to 2,000 Target employees are involved with e-commerce, he said.
In addition to the fee paid to Amazon, the partners have set up a revenue-sharing arrangement, but they declined to disclose the size of the deal.
Write to Nick Wingfield at nick.wingfield@wsj.com and Amy Merrick at amy.merrick@wsj.com |
