While Amazon hasn’t confirmed that it’s testing a program to incentivize retailers’ use of Amazon Pay, the initiative is a threat to companies like PayPal and Square that collect fees for the transactions they process on their payment platforms. The move appears to be part of a longer-term strategy that demonstrates Amazon’s willingness to sacrifice some profits in the near term to encourage adoption of Amazon Pay. The company has used similar discounting tactics to promote other platforms, like its Alexa digital assistant. The company can afford to sell the devices at a break-even price or even a loss if it means gaining more customers for its Amazon Prime subscription service or e-commerce platform.
