The speculation recently got out of control, and the company was forced to deny a City A.M. newspaper story in July 2021.
“Notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true,”
said a spokesperson from Amazon.
It makes sense for the worlds’ biggest retailer to incorporate additional payment methods. Credit cards have always been an issue for e-commerce as chargebacks are a recurrent risk.
Besides evident fraud causes, non-hack and identity theft cases topped $130 billion in 2020. Those cases are known as “friendly fraud” as malicious users will call the bank to dispute a charge, usually presenting a lie. Most say the purchase was unauthorized, the product was damaged or making some other claim.
For example, Facebook was severely impacted by children using their parents’ credit cards to purchase games, often without parental awareness or consent. Still, only 18% of the 80% of merchants that file disputes amongst illegitimate chargebacks end up winning.
What Crypto has to Offer?
Final and semi-instant settlements, which cannot be disputed nor reversed. Even though it might be a game-changer for the e-commerce industry, it certainly isn’t what customers demand as credit cards offer them some protection.
However, retailers will charge less by avoiding chargeback risks, as the currency embeds this delinquency rate on products’ prices. Finally, by being a company with a stellar reputation, Amazon will not face distrust from its clients, besides benefiting from possible lower costs.
Is There a Downside for Amazon?
Theoretically, no, but it is hard to estimate how much pressure comes from banks and regulators. Amazon might be a $1.8 trillion company, but it still depends on intermediaries, suppliers, and the government. There might not be an explicit ‘ban’ on cryptos in the U.S. Still, regulators have been pretty clear that Joe Biden’s mandate includes a regulation to curb illicit uses and deanonymize digital payment channels.
Considering the above, it is more probable that Amazon would initiate its crypto venture using a payment processor. In such a case, the giant tech company would not touch the coins directly, as the gateway automatically converts them to fiat money. Whether or not an external partner would handle those trades is unclear, but the end result is the same: the company will hold no cryptocurrencies.
Is there an Incentive to Launch AmazonCoin?
Not in the short term, considering Facebook already tried to launch Libra and faced strong resistance from regulators. Amazon gift cards already solve issues of users that do not have credit cards, and one can even use cryptos to acquire those: both Paxful and Bitrefill offer this service.
Amazon users seem to have no issues receiving Amazon credits or gift cards, as the service is trustworthy enough. In a nutshell, incentives are not in place for AmazonCoin.
Is Amazon a Potential Trigger for Crypto Prices?
Maybe there could be a positive price movement in the short term as the news would spread and help cryptos marketing. However, the net impact after a couple of months is close to none. Crypto holders would rather continue using credit cards for online shopping, while non-crypto users have no reason to acquire some stablecoin exclusively to access Amazon.
In a nutshell, unless some bank or intermediary censors part of the population, or some services, there is no rationale for the general public to jump into cryptos due to a potential Amazon marketplace adoption. Thus, cryptos’ primary use cases remain decentralized finance, NFTs, scarcity, and the individual sovereign offered by Bitcoin.