How Amazon's 'Buy with Prime' expansion pressures banks

As Amazon finds more venues for its mix of shopping, payments and delivery, it's also extending its ability to serve as a potential alternative to banks and card companies. 

Amazon this week said it would make its Buy with Prime feature available to all U.S. merchants by the end of January. Buy with Prime, which launched in April 2022 to merchants that use Amazon's fulfillment service, enables consumers who subscribe to Amazon Prime to pay on other retailer's sites and receive Prime's typical two-day delivery.

Concurrent with Amazon's announcement, BigCommerce this week launched its Buy with Prime app, enabling merchants to add Buy with Prime on BigCommerce storefronts with no coding. The result is there may soon be thousands of additional U.S. merchants using Buy with Prime, which exists in proximity to Amazon's alternative payment and financial services.

Susana Gonzalez/Bloomberg

Merchants accessing Buy with Prime will display a Buy with Prime Badge, which includes a Prime logo and delivery promise on product listings, which can be added or removed based on availability. Merchants can also accept Amazon payment credentials, creating an alternative to other payment methods and allowing consumers to shop and pay through the same user experience.  

Amazon over the past two years has expanded its reach into financial services to develop more revenue streams while competing in the race to build financial "super apps," which typically use enrolled payment credentials to diversify financial services, often as an alternative to banks. PayPal, Square, Apple, Walmart and Meta are all among the large technology companies that are using their base of consumers and merchants to offer expanding menus of financial services, including merchant credit based on future payment flows.  

"Banks are already participating in this ecosystem, as the back-end accounts accessed by Amazon Prime, Apple Pay, etc.," said Richard Crone, a payments consultant, adding these payment platforms usually connect to a credit card or demand deposit account. "But complacency increases banks' vulnerability to disintermediation." 

Amazon Prime has about 153 million users in the U.S., according to Statista. By expanding access to Buy with Prime, Amazon can act as a customer relationship management provider, using shopping, advertising and payment data to develop and offer new services to a sizable base. 

Amazon recently developed point of sale technology, and partnered with the fintech Affirm to offer financing and power payments on the Amazon Pay app. This allows Amazon to offer an alternative to credit cards. Additionally, Amazon in late 2022 partnered with Parafin, allowing Amazon to extend merchant credit. This in effect creates a two-sided business that provides payments and credit to both merchants and consumers — similar to Square, PayPal and traditional payment processors. 

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"Amazon is using embedded payments in Prime to expand revenue beyond its own Amazon sites," Crone said. 

That's powerful because Prime brings more than a payment. It brings an address free shipping, warranty, and suggestions based on knowledge of customer shopping history and other data, Crone said, adding this allows Amazon to reach consumers before they shop or pay, or at "check in."  

By harvesting data beyond its traditional platform, Amazon can add value to promotions and advertising that come before shopping or payment. Amazon did not provide comment for this story by deadline.   

"Banks need to get out ahead of checkout and innovate around 'check in'," Crone said. "It's easier to gain more revenue from existing customers than to find new customers."

Merchants that use BigCommerce to power online stores will be able to offer Prime delivery guarantees and remarket other products to new shoppers, said Sharon Gee, vice president of revenue growth for BigCommerce. 

"Shoppers have come to enjoy being able to buy products and have delivery the next day," Gee said. "What this expansion does is modularizes that. A merchant can now put Prime products directly on their own site." 

BigCommerce also announced a separate collaboration with Microsoft Advertising that lists Microsoft Ads and Listings on the BigCommerce marketplace. This enables BigCommerce's merchants to connect with consumers that are searching across the Microsoft Advertising Network. 

BigCommerce has entered into dozens of partnerships with payment firms and other companies that are building super apps.  BigCommerce is not a payment company, but it does offer retailers a software-as-a-service platform that powers digital payments, online stores, search engine optimization, marketing and security. 

BigCommerce's partners include PayPal, ordering technology firm Deck Commerce and payment technology firm Vendasta. BigCommerce has supported Amazon Pay for about six years, and has worked with Amazon rival Walmart.

Amazon also has other direct competitors. Expanding access to Buy With Prime is a new example of Amazon looking to tighten its relationship with merchants and keep up with rivals such as Shopify, which has built up its own merchant connections, said Daniel Keyes, a senior analyst at Javelin. 

"Buy with Prime is likely Amazon's answer to Shopify's Shop Pay buy button, and Amazon could be gearing up to compete more heavily with Shopify and other merchant services providers going forward," Keyes said.