Internet retail has been largely for people who pay with credit or debit cards. Few, if any website offer "cash on delivery" options which were common with late-night TV product offers in the 1980s and few offer any option to pay with cash aside from buying a gift card.
Amazon (NASDAQ:AMZN) has been a major exception. The online leader launched Amazon Cash a little over a year ago, a program that allowed people to add cash to their Amazon account via depositing it through partner brick-and-mortar retail chains.
Adding cash required showing the retailer a barcode that's specific to your account, having it scanned, and then handing over the cash. The money would then be available to use for purchases on Amazon.com nearly immediately and it could not be withdrawn.
Now, Amazon has added a second way for consumers to add cash to their accounts. It has partnered with Coinstar, the company that makes the change-counting machines found in many grocery stores.
How does it work?
Coinstar users can literally feed cash (paper bills) into their Amazon account. All they have to do is select "cash services" at a Coinstar machine, then pick "Amazon Cash." After that, they enter the phone number associated with their Amazon account and then insert any amount between $5 and $500. There are no fees for the service which is being rolled out nationwide.
Who is this for?
Amazon is going after two groups -- people who are afraid to use their credit or debit cards online and people who have neither a credit card nor a debit card. The first group is hard to quantify as some people who are afraid to shop online may be scared of turning over any personal information, not just their credit or debit card info.
Still, a late-2016 Pew Research report based on data from 2015 showed that 79% of Americans shopped online. It's likely that number has inched higher since then leaving Amazon a pool of roughly 1 in 5 Americans that could still be considered would-be shoppers. In addition, a 2015 study by the Federal Reserve Bank of Boston showed that more than 90% of Americans had a checking or savings account (which in nearly all cases would give them access to a debit card.)
"Amazon is all about making it easier for every single person to shop on their site, even if they don't have a debit card or credit card," CreditCards.com Senior Industry Analyst Matt Schulz told Motley Fool via email. "They want everyone to be able to buy from them, and they know that by allowing people to pay for Amazon products with cash, they're expanding their pool of potential customers."
Amazon wants everyone
Essentially Amazon wants to not ignore the small percentage of the American public that would shop on its site, but can't because they lack a credit or debit card. That's a small audience as a fraction of the entire country, but it's still a sizable amount of people.
You can shop at brick-and-mortar chains using any method of legal tender. Some supermarkets even still take checks. That wins those businesses some customers by default even when Amazon has better prices.
This is Amazon leveling the playing field. Yes, it's about grabbing every dollar possible, but this also gives customers who may have lacked access to the platform a way to use the online retailer when it benefits them.