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Amazon Takes on Square & PayPal iPhone Card Reader



Square and PayPal both have mobile credit card readers that storefronts can use to ring up payments, but Amazon is getting in on the action with a card reader of their own for iPhone.

The giant online retailer has launched what it’s calling Local Register, and it’s a credit card reader that looks to take Square and PayPal head on in the small business market.

The card reader works similarly to Square’s and PayPal’s own card readers, where you plug the device into the headphone jack of a smartphone or tablet and scan credit cards to accept payments.

While the device itself will cost you $10 up front, Amazon is using this as sort of a security deposit, and will credit that money right back to you by using transaction fees. Furthermore, Amazon is undercutting both Square and PayPal when it comes to the transaction fee. Square charges a 2.75% transaction fee, while PayPal charges 2.7%. However, Amazon is only charging a 1.75% transaction fee from now until the end of 2015. After that, it’ll jump to 2.5%, which is still cheaper than Square and PayPal, although we wouldn’t be surprised to see both companies lower their fees in order to compete.

The device works with iOS and Android devices, as well as Amazon’s own line of Fire hardware. However, the list of iOS and Android devices is severely limited, only being able to run on iPhones, iPads, and newer Samsung Galaxy S devices.

There’s also a companion app that you install on your smartphone or tablet that will handle the money, and you can either deposit it into a bank account that you link to the app, or you can spend that money directly on Amazon. There are also a handful of accessories that you can get for the card reader,¬†including cash drawers, receipt printers, and smartphone cases and stands to make it easier to swipe credit cards on your smartphone or tablet.

One of the bigger downsides where’ hearing about, though, is the setup process. Reviews for the service are already starting to trickle in and many users are saying that while it’s a great idea for Amazon to have its own card reader and payment system, the sign-up process is a bit confusing, as some users are saying that they have to create a whole new Amazon account and cannot use their current Amazon account.


Users are also complaining about the lack of device support, with popular devices like the Nexus 5 and HTC One out of the question. Of course, Amazon’s Local Register is still very new, so it could be likely that the company will expand support for the card reader to more devices as time goes on, seeing as how not everyone uses an iPhone, iPad, Samsung Galaxy S, or Fire device.

Another downside that users seem frustrated about is that depositing money into a linked bank account will only happen the next business day, instead of the same business day, even if it’s before the cutoff time. This is where PayPal Here has a bit of an advantage, but the 1.75% introductory transaction fee that users can’t take advantage of is pretty enticing, and it’s good until the end of next year. Users want to pay as little as possible with any kind of fees, so we wouldn’t be surprised if Amazon took away some customers from Square and PayPal.

However, it’s possible that Amazon won’t profit a whole lot off of its Local Register, at least not until the introductory fee rate goes up to 2.5%, but the company has been known to sell products at cost just to undercut competitors and gain a lead in the market share, so we wouldn’t be too surprised if it was doing that here.

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