We Have No Evidence Amazon Is Launching a Square Competitor, But I Hope So

By Sarah Lacy , written on September 27, 2012

From The News Desk

There are more rumors swirling the blogs today that Amazon is launching a real-world payment app to compete with Square. Truth be told, the reports are pretty thin on new details and sourcing -- it's not even credited to someone close to the company. In March 2011, Bloomberg cited similar rumors sourced to those with "knowledge of the product," and little has confirmed those reports either.

Typically this would all be too speculative to warrant a follow up story from us. But I'm writing one anyway because I really, really hope it's true.

Payments is shaping up to be the most interesting space in technology right now. The story has everything, a dominant giant that has lost its way as well as the affections of developers after a decade of dominance and a trio of feel-good upstarts nibbling away at its entrenched position. There are hundreds of millions of dollars of capital at stake, PayPal's original founders backing one of the new upstarts Stripe, and huge bets being placed by massive retailers, like Starbucks, on the other Square.

And unlike the millionth cheesy "Instagram for video," these companies are building something incredibly hard from both a technological and go-to-market point of view. What's more: It's something the world needs. What could make this story better?

Amazon. The company on top of the technology world right now, after more than a decade of being pooh-poohed by the Valley and Wall Street alike. The only company whose tablet hardware has also enthralled Apple nerds. A company not afraid to make aggressive moves to upend established industries. One of the only early Internet companies that has continued to greatly innovate post-IPO. The only company that could possibly terrify the surging Valley darling, Square.

No offense, Braintree, Stripe, or Square. But Amazon is the one with the best odds of destroying PayPal's hegemony in the modern payment world, and it'd be a way harder incumbent to dislodge. Google has deep pockets and a lot of smart people on staff, but it's Amazon that has already been a payments innovator on the Web.

Amazon aggressively pushed for one-click checkouts on its own site, long before that was something driving mobile commerce. Prime is one of the most genius moves in ecommerce, locking in buyer loyalty in a medium where clicking around and comparing prices was considered a necessity of doing business. And what made the Kindle so magical wasn't its early, kludgy hardware that caused legendary designer Philippe Starck to literally look down his nose at the device, holding it away as if it could infect him, and quip at an early Le Web, "Tis a pity... it's almost modern."

No, it was the Kindle's store and Kindle software and most of all the Kindle's revolutionary one-touch payment that allowed impulse book purchase for pretty much the first time in publishing history. It's little wonder Kindle books are outselling hardcovers. You can practically think of them and own them.

This Belieber-like gushing is not to say efforts in real world payments would be a slam dunk for Jeff Bezos and friends. There are a few important caveats to note. As the above examples show, Amazon has mostly applied this shopping cart wizardry to the electronic world. And until recently there just wasn't much innovation there. That made it easy for Amazon to dazzle.

And Amazon has mostly focused on streamlining payments to sell its own things on its own site and devices. Amazon has generally had a borg-mentality of sucking more into the walls of the online monolith, whether its expanding categories of retailers, offering stores to third parties, building infrastructure so good that became a standalone product in AWS, and even becoming an aggressive publisher of the books it sells. When you control the whole experience, it's a lot easier to control the details and to create a gorgeous experience.

Amazon won't have that luxury as it forays out into the physical world. And retailers, who've been long kicked in the teeth by Bezos and his irreverent, horking laugh, may not want to open their arms to Amazon. If Amazon is overconfident in its chances, it could well stumble. Apple's coup in the physical retail world was the exception for a tech company, not the rule. And even the great Apple failed at services that should have leveraged off of its music dominance, like Ping. Likewise, our ecosystem -- and this blog-- is built on a belief that startups have huge advantages when it comes to industry disruption.

But if I were to bet on any deep-pocketed tech company to best Square at this game, it wouldn't be PayPal or Google. It'd be Amazon.

[Illustration by Hallie Bateman]