Would You Bank With Amazon? Most Prime Members Would
Written by
Karen Doyle
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
- Two-thirds of Prime members said they’d try a free Amazon checking account that offered 2 percent cash back on Amazon.com purchases.
- Amazon would join with an existing bank and provide the customer experience.
- The e-commerce giant could realize significant savings on credit card fees.
Category-killer Amazon is testing the waters in another consumer segment: banking. The e-commerce giant already has a credit card with its name on it, offered by Chase, and is considering offering checking accounts as well. A recent survey by Bain & Co. found that two-thirds of Amazon’s estimated 95 million Prime members would give Amazon checking a try if it offered 2 percent cash back on Amazon.com purchases.
Amazon would not become a bank but would partner with an existing bank. Amazon would provide the customer experience, including the technology front end, which is its strength. It would leave the onerous regulatory requirements to the partner bank. Amazon would not have brick-and-mortar locations and could potentially use technology like its Alexa personal assistant to reduce the number of customer service representatives it would need.
Click to read about the advantages and disadvantages of online banking.
Another big advantage Amazon could see from offering checking accounts is a reduction in the credit card processing fees it pays. If 15 percent of its e-commerce customers paid directly from their Amazon bank account rather than by using a credit card, Amazon could save over $250 million a year in annual interchange fees in the U.S., according to Bain & Co.
Check Out: How Much Amazon Has Invested in Acquiring Other Companies
Amazon has access to a large segment of the population through its Prime program, as well as those who regularly shop at the retailer but do not have Prime. Many of these customers are young, with few assets to keep in their bank account. This makes them unattractive to traditional banks but not to Amazon. Attracting these customers early on in their banking lives could be a big win for Amazon.
Use These: 23 Secret Ways to Save Money on Amazon
Bain & Co. predicts that Amazon’s banking services could expand to over 70 million consumer relationships over the next five years, putting it on par with Wells Fargo, which is currently the country’s third-largest bank.
Click to find out brilliantly slick ways to get Amazon Prime for free.
More on Making Money and Business
- 7 Companies That Have Reinvested in America Following Trump’s Election
- How Your Favorite Brands Reinvented Themselves and Made Big Money
- Future Is Gloomy for Retailers as They Cut Jobs and Shutter Stores
