Amazon’s recently-announced mobile credit card payments service, Amazon Local Register, is the massive corporation’s latest attempt at raising revenues — and, as a business based in Washington state (therefore sharing an economy directly with one of the country’s only legal cannabis markets), the potential for such a system could prove quite lucrative.
Since legal marijuana sales began this year in Colorado and then Washington, the cannabis industry has repeatedly struggled to find ways to circumvent the cash economy that cannabusinesses have been forced into by federal law. Though the federal government has issued guidelines to banking professionals on how to legally offer their services to these federally illegal businesses, recent reports suggest that only 105 banks and credit unions across the country are actually doing business with marijuana retailers — and, for the most part, such banking relationships are still kept a closely-guarded trade secret. As a result, the cannabis industry’s cash-only economy has largely persisted.
Soon, however, if the recent federal push for an end to the cash-only marijuana economy pans out, ganjapreneurs in Washington might be offered a new option: the credit card processing system that is Amazon Local Register.
Amazon’s new product is clearly designed to compete with Square, the company who pioneered the mobile credit card processing business model. Square’s mobile card-swiping hardware has been widely used for delivery services, farmers’ markets, food trucks, and local cafes across North America in recent years. In fact, if you’ve visited Starbucks recently, chances are you also encountered the unique credit card processing system.
According to their website, Square’s initial business model was based on one simple belief: “that everyone should be able to accept credit cards.” However, this idealism isn’t completely represented in the company’s policies regarding legal marijuana businesses. According to one Square spokesperson, “It’s a violation of our terms of service to accept payments with Square for any illegal goods or activities, whether prohibited by federal or state law.”
Amazon, with all the capital and resources of its fiscal empire, could (in theory) finally make that mission statement apply to the legal cannabis industry, at least in Washington, where Amazon’s headquarters are located.
Amazon Local Register will be offering a lot of additional incentives for businesses to choose their product over Square’s: they will charge only 1.75% of transactions made by businesses who sign up by October, after which the charge will be 2.5% — Square, on the other hand, charges 2.75%. Additionally, Amazon will be offering the necessary card-swiping hardware for essentially no cost: instead, the first $10 in transaction fees will be credited back to Amazon to cover the costs of the mobile card reader.
Whether or not Amazon’s new mobile credit card processing service will actually be made available to cannabusinesses is still unknown, but one thing is certain: if you could get your hands on 2.5% of what’s earned in Washington’s retail marijuana market, you’d be making a lot of money.
Photo Credit: Philip Taylor