This Could Be Amazon’s Next Blockbuster Deal…

What’s that $3.50 surcharge?

I was checking an itemized dinner receipt before signing recently (never a bad idea) and ran across a curious line item. It was right there in between the tax and gratuity. I’m betting you’ve probably spotted one of these miscellaneous fees as well tacked on to a receipt from a local restaurant or retailer.

That’s the merchant passing the credit card fees along to you and me. We all know there’s a processing fee involved every time we swipe (or tap these days) the plastic. How else do you think Visa generates $12+ billion in annual profits?

For years, these transaction charges were largely invisible to consumers and paid for entirely by store owners. But in the wake of new laws, thousands of locations across the country have begun adding 3% or 4% back to the bill to cover card processing fees. Once rare, it has become common practice in many states.

It’s hard to blame them. Picture a small mom-and-pop pizzeria that does $300,000 in yearly credit card sales. At an average of 3%, their card processor would deduct $9,000 in fees over the course of a year, a meaningful hit to the bottom line.

So do the math on a national big-box chain like Home Depot, which hauls in that much every single minute of every single day. Across the country, U.S. merchants handled $7.6 trillion in credit card sales volume last year. And all those transactions generated more than $160 billion in fees for card processing networks.

And with more purchases going through cashless, digital routes, this total is headed nowhere but up. Of course, when you think of ecommerce, one name immediately springs to mind:

The undisputed king of online shopping is the world’s second largest retailer, generating $513 billion in yearly revenues. That’s over $1 billion per day. On Amazon Prime Day, the company’s annual sale brought in more than $12 billion…

Source: Statista

And just think, nearly every one of those sales incurs a credit card fee. You think Jeff Bezos might be interested in eliminating all those pesky fees? Permanently?

You better believe it.

Amazon Vs. The Credit Card Industry…

Amazon has certainly had its squabbles with card processors. Earlier this year, the company threatened to block Visa cards issued by U.K. banks from its website following an increase in fees. Amazon is well-known for throwing its weight around at the negotiating table. But Visa isn’t one to back down either and accused the retailer of limiting consumer choices.

After some tense back-and-forth, the two parties reached mutually agreeable terms and the ban was lifted. While specifics weren’t disclosed, it’s understood that Amazon pays considerably less than smaller retailers. Still, even at discounted rates, these fees can wipe out billions each year.

Of course, there’s more at stake than just shaving costs and adding a point or two to operating margins. Amazon is actively fighting for a piece of this lucrative business. Why do you think it launched Amazon Pay – to compete as a payments facilitator with the likes of PayPal.

The service (which has already attracted more than 30 million users) allows internet shoppers to complete checkout transactions at third-party websites using their stored Amazon credit account information. Consumers love it because it saves time on repetitive data entry – no need to enter card numbers and mailing addresses over and over. Merchants like it because they can piggy-back on Amazon’s special card processing discounts.

Clearly, Amazon already has its foot in the payments processing door. The company has also created its own co-branded credit card, the Amazon Prime card, which carries no annual fees and earns 5% at all Amazon properties, including Whole Foods.

These cards are stamped with the Visa logo. But what if there were a way for Amazon to cut out Visa entirely from the loop? It’s entirely within the realm of possibility. Not by acquiring Visa (which would likely get stonewalled by antitrust regulators), but by acquiring one of its scrappy rivals.

Closing Thoughts

It’s not as crazy as it sounds. As I’ve mentioned before, this is an industry that’s ripe for disruption. It’s one of the reasons why there are dozens of “fintech” upstarts, like PayPal and Square, competing in the payments industry.

The chance to cut out the middleman and disrupt this space might be too good for Amazon to pass up, which is why I think they’ll make a move sooner rather than later. When they do, it’s going to be a bombshell that will send waves through the financial media. And, of course, shares of the company in question will likely take off and never look back.

That’s why I’ve just put the finishing touches on a groundbreaking new report that reveals what you need to know about this one-of-a-kind takeover opportunity.

Go here to learn more now.