Now that Amazon has secured the millennial consumer cohort and the baby boomers, the e-tail behemoth wants to get Gen Z to shop its site — even though many in the age group don’t have credit cards or bank accounts.
To capture this group, Amazon has plans to provide a solution that’s a notch above what its Amazon Cash offers. With that option, consumers can go into a participating retailer, like 7-Eleven or CVS Pharmacy, show a personalized generated bar code to the cashier and give them cash to add to a balance in their Amazon account, which they can then use to shop the site.
But because that process lacks in the convenience department, Amazon wants to work with banks to create a checking account of sorts. It would offer youth, who can’t typically spend entirely on their own, a new path to purchase.
The e-commerce giant is reportedly in talks with JPMorgan Chase & Co. and Capital One Financial Corp. to create the new account option, according to Bloomberg, citing sources close to the matter who requested anonymity.
If the idea comes to fruition, Amazon would have the opportunity not only to develop a lifelong customer from early on but deliver a payment option for an underserved demographic that may not have the same kind of limiting restrictions, service charges and fees that checking accounts for teens currently come with.
“I’m sure Amazon is scaring the hell out of every single regional bank and credit union right now,” Stuart Sopp, CEO of Current, a startup offering debit cards to teens, told Bloomberg. “The banks have very clearly not serviced these demographics, so there’s opportunity.”
As Amazon aims to corner every market it can in its path to e-commerce dominance, it’s looking to create opportunities that tap into users’ life cycles. This new move suggests Amazon will attract minors while they are still living at home so that by the time they reach adulthood and are ready to live on their own, the retailer has so ingrained itself into their lives that it feels only natural to continue the relationship.
An Amazon checking account could attract adults, too. According to a Cornerstone Advisors study published in January, Amazon’s banking venture could end up convincing adults to close their existing bank accounts and open one with the Seattle-based retailer.
“Right now, banks might not be offering exactly what millennials want or need,” Marielle Schurig, a financial adviser at UBS Group AG, told Bloomberg. “A lot of monthly statements don’t offer insights or tools to manage your records or analyze your spending to budget or save for the future.”
This may be Amazon’s opportunity to fill the gaps with adult millennials. And customers are enthusiastic about the prospects of an Amazon debit account.
According to a Bloomberg poll, 27 percent of millennials said they’d open an Amazon checking account even if it came with a $10 monthly fee.
“This is music to Amazon’s ears,” Bloomberg reported Cornerstone as saying in its report. “Why would they want to offer a free checking account when they can bundle the services of various providers on their platform — merchants and financial services providers — and charge a fee for it? A fee that consumers are willing to pay.”