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AmazonWatch: Amazon Credit Builder

June 11, 2019

Amazon first issued a credit card to interested customers some years ago. There are a range of ‘loyalty’ branded credit cards available now, and a new one is being trialled in the US.

So far, this isn’t really news – but the purpose of the card might be.

New initiatives like the Amazon Credit Builder will increase eCommerce market size.

Known as the Amazon Credit Builder, it’s designed for customers with a poor credit rating – people who might have trouble getting cards otherwise.

The Credit Builder offers the same perks as the Amazon Store card, but does require a security deposit. Its credit limit is determined by the size of the deposit. However, the deposit is reported to be risk mitigation more than anything else.

Users receive a 5% cash back on all purchases, and will receive tips to build their credit rating. After a certain period of steady repayment, Credit Builder carries will be able to ‘graduate’ to a standard Amazon card. This comes with a return of their deposit.

The goal of the card is simple; to help a new market segment receive credit and support. If it helps them to manage their money and rebuild their credit ratings, that just makes the system more attractive.

As usual, this system is being trialled in the US first. Given the nature of this service, it’s likely Amazon won’t be able to make a decision on rolling it out anywhere else until at least the end of 2019, but this may be a factor from 2020 on – a new source of convenient online payment for a market which often can’t shop online so easily.

This is also another step forward for Amazon in diversifying its brand. The company is continuing to build up new income streams that don’t involve directly selling to customers. Instead, they use Marketplace Sellers and the massive Amazon Web Services money-spinner to fuel diversification.

Building a wider commerce ecosystem at a time when US Presidential candidates are starting to talk antitrust proceedings with Amazon, Google, and Microsoft seems like a risk – but it does also mean that if Amazon finds itself split into a family of businesses, each one should be viable on its own.

This seems to be the same strategy used by Alphabet, the parent company to all things Google. With the EU judgement that created Google Shopping Europe and opened the door for CSS services in mind, this kind of diversification may be necessary.

Savvy businesses are advised to ask themselves what industry Amazon will take a foothold in next – and plan accordingly.

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