Shares of Amazon (AMZN - Free Report) climbed premarket after the Wall Street Journal reported that the e-commerce giant hopes to enter the ever-growing person-to-person payment business. The move would put Amazon in direct competition with PayPal’s (PYPL - Free Report) Venmo as well as some big banks.
Amazon is in the early stages of developing peer-to-peer payment technology for its widely popular Alexa voice assistant, according to the Journal’s report.
In theory, this move would allow users to pay their friends, family, and possibly bills—similar to banking apps—by simply saying “Hey Alexa, pay John $50 for concert tickets.” This news helped send shares of PayPal and Square (SQ - Free Report) down premarket.
The person-to-person payment business has grown hugely over the last few years, driven by Venmo and others. This has forced big banks, like JPMorgan Chase (JPM - Free Report) , to invest heavily in mobile payments technology.
Amazon’s entry into the peer-to-peer payment business would also encroach on credit cards firms such as Visa (V - Free Report) and MasterCard (MA - Free Report) , which have invested in various fintech ventures for some time.
For this payment initiative to work, Amazon might need even more access to consumer’s personal information, but this doesn’t seem to have been an issue for many customers, up to this point. It is also part of a larger move by Amazon to enter the financial sector, which includes possibly creating a checking account-like service.
Amazon currently offers an online and digital payment service called Amazon Pay that is similar to PayPal.
If Amazon does eventually offer peer-to-peer payment through Alexa, or even Prime, the company could easily grab a large portion of this quickly expanding economic sector. Nearly half of U.S. households are Amazon Prime members, according to a Consumer Intelligence Research Partners report.
Venmo’s payment volume did expand by 97% last year, with the app processing roughly $35 billion worth of total payments. The company does not publish total user data, though some of the most recent estimates put its monthly users at around 7 million. Meanwhile, the more established, PayPal, currently boasts 227 million active customer accounts around the world.
There is no official timetable or even confirmation that Amazon will offer peer-to-peer payment options. But if history is any guide, Jeff Bezos’ company will eagerly enter into another sector of the economy without hesitation.
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