Amazon Coins? I think I’ll stick with quarters...

A couple weeks ago, Amazon announced the rollout of Amazon Coins – their new virtual currency – depositing $5 worth of said Coins in every Kindle Fire owner’s account to get started.  Industry reactions have run the gamut, some of which have taken this opportunity to wax poetic about a future of virtual currencies and new payment concepts.  I’m a big believer in the development and usage of mobile wallets and contactless payments, but virtual currencies?  You’re going to have to convince me.

After spending years in the financial services industry – most recently trying (with marginal success) to simply convince consumers to pay their bills online, I am hesitant to think this move isn’t more than much ado about nothing.  Will there be adoption?  Absolutely.  There will always be those loyal customers who are willing and excited to embrace new ideas like this one.   But other than the minimal 10% discount on purchases made using Amazon Coins, what is the point? 

As I understand from the announcement, Amazon Coins are limited to use in the Kindle Fire Store, significantly constraining their value proposition and limiting their audience.  These are already captive customers, unable to purchase apps elsewhere, implying Amazon is more interested in pre-payment for apps than reaching a wider audience.  The opportunity for Amazon lies in extending the use of their Coins to the larger Amazon customer base which would certainly increase the value proposition of their virtual currency and appeal to a larger audience.  Knowing how much I spend at Amazon each month (a secret I’ll never reveal), I am hopeful the initial rollout to Kindle Fire users is just a beta test before allowing all Amazon customers to prepay by buying Amazon Coins (but only if they continue offering the 10% discount). 

Since the Amazon Coin launch, Google announced they will soon be rolling out the ability to ‘attach’ money to emails sent within Gmail.  While exact terms and fees have yet to be disclosed, for me this service already offers far more value.  There is no cost of entry, no fancy device to be acquired first, and doesn’t require me to hand over my hard-earned cash for purchases that may not be made for months.  All it requires is a free Google Wallet account and a Gmail account.  

The P2P payment space is highly competitive, where retail banks and third party providers continue to battle PayPal as the go-to destination to transfer money between friends.  If Google keeps fees to a minimum, its value proposition could be strong enough to quickly become a serious threat to PayPal’s top ranking. 

On the flip side (pun intended), I’m not sure I’m prepared to accept Amazon Coins as a threat to the Almighty Dollar. Even the European Union knew it was more convenient to move to one currency.  I would prefer Amazon spend less time imagining new currencies and accounts for me to juggle, and instead look for other ways to make it more convenient for me to make payments – whether online or through mobile devices.

Just my two cents…er, coins.