Amazon data glitch could hinder plans for point of sale

There's never a good time to expose customer data, but the incident Amazon disclosed Wednesday could upend two major events: Black Friday/Cyber Monday and a reported effort to get merchants to accept Amazon at the point of sale.

Amazon notified affected customers by email, saying a technical error exposed their names and email addresses, BetaNews first reported. Several affected customers went to Twitter to share the letters they received from Amazon. And even though no passwords were exposed, it's possible that the names and emails could be used as the basis for phishing attacks to obtain other credentials, CNBC warned.

The incident came to light while Amazon is reportedly pitching its Amazon Pay digital wallet to brick-and-mortar stores. Citing unnamed sources, The Wall Street Journal reported Wednesday that Amazon is first approaching gas stations, restaurants and other merchants that aren't direct competitors.

Susana Gonzalez/Bloomberg

Such an approach would make sense, seeing that gas stations have muddled through the EMV chip card transition in the U.S., with many seeking alternative mobile payment or in-app options to bypass an expensive conversion for chip cards.

The exposure may cause merchants to wonder about Amazon's security, but Amazon's reputation as an e-commerce juggernaut could protect its plans from any backlash. After all, Apple felt confident enough to announce Apple Pay in the wake of its iCloud service being used to expose celebrities' private photos.

The retailers Amazon is reportedly targeting may also be relieved that they can share in some part of Amazon's widely publicized retail innovations.

"Considering [Amazon's] move to create its own retail settings, it seems logical that they would think about expanding the digital wallet," said Thad Peterson, senior analyst with Boston-based Aite Group.

It becomes a question of where Amazon would seek to do so, above and beyond a potential initial phase with gas stations and restaurants, Peterson said.

"We know the digital wallet would be on Amazon properties, and the next logical step would be making it available at merchants that are already selling on Amazon online," Peterson added.

The timing is odd for a number of reasons.

For one, it's widely accepted that retailers lock down any terminal upgrades in preparation for the holiday shopping season. And Amazon is still in the early stages of its own reimagined approach to retail checkout. There are still only six Amazon Go cashierless stores — half located in Amazon's home turf of Seattle — and it would make more sense for Amazon to test new payment options at its Whole Foods stores than with partners.

Amazon did not reply to inquiries from PaymentsSource regarding the retail push or the data exposure.

Though Amazon isn't typically as tight-lipped about its intentions or plans as Apple and others have been on the payments landscape, it has not been a common theme of late for the e-commerce giant's executives to openly speculate about expanding the digital wallet.

Regardless, Amazon has not been shy about finding its niche in various other aspects of consumer shopping and customer service.

In a move from the Square playbook when it first moved into the payment processing world, Amazon is offering incentives such as lower payment-processing fees or marketing services to entice merchants to accept its digital wallet, the Journal reported.

Such incentives indicate that Amazon sees the path to merchants' hearts by again positioning itself as a company that can ease the pain of interchange and other fees from the card brands.

Similarly, neither merchants nor banks have ever expressed pleasure about the cost of accepting Apple Pay.