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Square breathes sigh of relief as Amazon discontinues its credit card reader

Square breathes sigh of relief as Amazon discontinues its credit card reader

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Last Fall, Amazon gave Square a good scare when it announced its very own mobile card reader. The system, called Amazon Register, worked a lot like Square: small businesses could use a small credit card reader to accept plastic for purchases using little more than a phone or tablet. To get businesses interested, Amazon even undercut Square's processing fees — it charged just 2.5 percent per swipe, compared to Square's 2.75 percent. A promotion dropped that rate as low as 1.75 percent per swipe.

Amazon offered lower rates than both Square and PayPal

Now, little more than a year after launch, Amazon is tossing Register onto its ever-growing pile of failed experiments. On Friday, Amazon stopped selling the $10 plastic credit card reader that the service relies on. And a statement on the service's site says that businesses will no longer be able to process purchases with Register on February 1st, 2016.

The mobile card reader business operates on razor-thin margins, and there's a good deal of competition not only from Square, but also PayPal. By undercutting those competitors' rates — and running other promotions that gave away card readers for free — it's likely that Amazon was losing money on Register. Despite those efforts, the company likely decided that it didn't get the massive user base needed to sustain the business.

Amazon's announcement that it was discontinuing Register came alongside news that it was shutting down another local business venture, called Amazon Local.