Amazon Shuts Down Its Daily Deals And Credit Card Processing

Amazon shuts down two of its operations due to failures of the platforms.

Amazon was reported to face loss in two of its operations: daily-deals coupons unit and credit card processing. Hence, it has made an announcement to shut down both these services, according to WSJ.

The online retailer will be closing its coupons of daily deals on Amazon app and its website as of December 18. The announcement was made on Friday regarding the services shutting down soon. The credit card business is expect to close on February 1, 2016, and will not be take any new users. The in-store register was initially launched to compete with Square but unfortunately, that did not happen.

The credit card processing service was launched to enable the company to make card readers utilized by small businesses. Those readers were attached to customers’ smartphones for the transactions to be complete while the company would profit from every transaction in percentage.

The Local Register credit-card processing was launched last year in August. It was expected to compete with PayPal and Square and evidentially, it was expected to be huge success at the beginning, but some thought of it to be just a way of coming into the business of mobile payment market. The service turned out to be a failure due to lack of customers even though it offered low processing fee.

Apart from closing down the credit-card processing platform, Amazon is closing the daily deals coupon service as well, which was launched four years ago due to the growing popularity of discounts and sales. Groupon was a huge reason for this, as it introduced discounts at restaurants and other businesses. This service was expected to be beneficial for medium-sized businesses, and when it was launched, discounts and deal were trending rapidly.

Due to the trend, many sites launched deals and discounts of specific categories but this caused many consumers and merchants to run away from the discounts because of the poor economics of the coupon for merchants. The company also launched ‘LivingSocial’, which cost it $200 million, regarded as another onetime highflier in daily deals.

Amazon still holds 30% of share in Livingsocial, which valued it at $1billion but went down to $242 million by the end of 2014. It also recorded a $169 million write down on the investment. The trend of daily deals is slowly dying now, which is making business suffer. This is also the reason for e-commerce tech giant to shut these operations down.

The main reasons for the shutdown of both operations have not been made public yet. The obvious reason for this decision is the failure of the services. The shares were low in the revenues, which could be a major factor as well.

Amazon stock closed at $625.90 on October 30.