Little Big Brother
Amazon.com is strongly considering plans to enter the checking account business. Today the Wall Street Journal reported that Amazon is trying to create a checking-account-like banking product. Early reports say that Amazon isn’t interested in becoming a bank, but has engaged in talks with large financial firms about a possible partnership. The talks mainly focus around ways to build non-traditional banking/checking accounts that would appeal to younger customers and those without bank accounts. That language is reminiscent of Amex Bluebird, and therefore creates an instant spark of interest for me.
“Last fall, it put out a request for proposals from several banks for a hybrid-type checking account and is weighing pitches from firms including JPMorgan and Capital One Financial.” – Wall Street Journal
Amazon’s entrance into the checking account world is most likely to create a new revenue stream, allow it to get even more data on its customers, and to possibly reduce fees that it pays to financial firms. However, even though bids have been issued to some seriously substantial outside banks, the deal might not become a reality and is still in the early stages.
Hearing about Amazon’s potential entrance into checking accounts is exciting because it may open up some solid and even lucrative manufactured spending pathways. About 5 years ago Amazon allowed customers to transfer up to $1k a month to anyone without fees (via Amazon Payments) and pay via a credit card – all without fees. It was simple, money order and fee free MS, and lasted roughly a year before the option was shutdown. The option closing had no effect on customers relationship with Amazon, but stopped people from obtaining free points while Amazon at the fees. So Amazon has already been down the travel hacking path.
Through Chase, Amazon has offered credit cards since 2002 and has recently launched the Amazon Prime Rewards Signature Visa. The card earns users 1% – 5% cash back on different product categories but needs a Prime membership to earn the highest rates of return. Amazon Payments, a new co-branded credit card, and now strong talk of a major banking partnership for checking accounts all seem to point the arrow in these same direction for the company.
Right now Amazon accounts can be loaded in a variety of ways including credit, debit, and gift cards – all fee free. When I hear “non-traditional checking account” I think non-traditional loading options, which could present opportunity. If an option existed to load a new checking account fee free with debit cards, well I’d probably have to medicate as the excitement would be off the charts. However I’m guessing that possibility is a long shot. If Amazon does get into checking accounts, hopefully some travel hacking options open up that would help out people that live in areas where more traditional forms of MS are difficult or non-existent.