When I was a kid, I'd walk to our local bank about five blocks from our house and deposit cash I had earned from babysitting. I took my bankbook, filled out a deposit slip, and handed everything to the teller at the window. Then I got a receipt, which I carefully filed in a desk drawer.

Amazon banking services aren't going to replicate the experience of going to a brick-and-mortar bank, just like its core retail services aren't ever going to be the same as going to a bookstore and settling in for hours, flipping through new volumes, sipping coffee, and maybe petting the bookstore cat.

But despite sporadic reports that Amazon is looking into providing checking account services, it doesn't seem likely that it will be part of an online bank that houses savings, checking, and credit cards under one digital roof. As a consumer, using Amazon's payment and deposit services might seem so natural to you that you don't realize they are banking services at all.

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Nevertheless, Amazon may take an increasingly large share of the financial services market in the coming years as it provides more services through its platform. And Amazon may not be alone. “As the technological barriers to entry lower, you’ll see more and more tech companies like Google and Amazon trying to act like a bank,” says Cooper Smith, Gartner L2‘s director of Amazon IQ Research.

Amazon banking services are already prevalent — or at least gaining traction. You can:

  1. Send and receive payments through Amazon Pay
  2. Deposit money using Amazon Cash
  3. Get small-business loans through Amazon Lending
  4. Apply for an Amazon rewards credit card

1. Amazon Pay (and Other Payment Services)

Cash, checks, wire transfers . . . the banking system has evolved to make transferring money between two people easier and easier. Did you ever wonder why it took so long for a check to clear? It dates back to when physical pieces of paper were being sent around in sacks, according to NPR, and it's been harder to speed up the process than seems reasonable.

Enter digital payments, which feel almost seamless. Amazon has been trying out various payment services since 2007, but not all of them have worked out.

For example, Amazon tried selling physical retailers machines for swiping credit cards, promising to charge them lower processing fees than competitors. However, the tech never caught on.

That said, you’re probably already familiar with Amazon Pay. I see little “pay with Amazon” buttons all over the web. This service lets you pay using the details already stored in your Amazon account. In theory, this removes the need for you to also maintain accounts with other payment services like PayPal.

Amazon Pay also has a new service that lets charities receive donations via Alexa. You could simply say, “Alexa, donate $500 to hurricane relief,” and the money would come out of your Amazon account. Talk about seamless!

2. Amazon Cash

Before I started researching this article, I had no idea that you could deposit cash with Amazon.

Amazon Cash lets people who don't have access to banking tools like debit or credit cards shop on Amazon. You need a mobile phone or access to a printer (like at a public library).

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After signing up for the service, you can take cash and a barcode to participating stores such as CVS or 7-Eleven. The cashier scans the barcode and accepts your cash, and then the money is available in your Amazon account.

Unlike a traditional deposit bank, this has some obvious downsides. For example, your money won't earn interest. However, it could have some advantages over cash in your mattress, especially as you can use Amazon Pay to shop at other stores elsewhere on the web.

You can also deposit money directly to Amazon Allowance if you want to give a child or other dependent a monthly account.

3. Amazon Lending

Amazon's loan program, Amazon Lending, isn't very well known yet. That might be because you can’t just go out and apply for a loan. Loans are only for small businesses that sell via Amazon. If you’re an Amazon seller, you can apply for $1,000 to $750,000 to grow your business, and then repay the loan in fixed installments over a year.

Pros and Cons

There are pros and cons for Amazon sellers thinking about taking out this kind of loan, says Brayden McCarthy, vice president of strategy for Fundera.

On the plus side, “Amazon goes to great lengths to make its loan terms fully transparent and easy to understand,” McCarthy says.

“And it's incentivized to keep doing that because it wants the business owner to succeed so that it can sell even more on Amazon's platform.”

Interest rates and the length of loans might not be as attractive as they are with traditional banks. Amazon doesn't provide sample interest rates, but they may be comparable to credit card rates, at around 15 percent.

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Meanwhile, a traditional bank might offer closer to six to 10 percent interest. Length of loans can vary, but Amazon's max out at a year for repayment, while a traditional small business loan might be repayable over as much as a decade.

On the other hand, “banks move at a glacial pace, which can be infuriating for busy entrepreneurs, and even cost the business owner more money in the end. Time, after all, is money,” McCarthy says. “The benefit of Amazon [and its competitors like Square and PayPal] is speed and simplicity. You can get approved for a loan almost instantly, and the money can be in your account within a day or two.”

Amazon has made over $3 billion in loans as of the end of 2017, and is now in partnership with Bank of America Merrill Lynch.

It's a little unclear where Amazon's lending business is going as of summer 2018. It might be in the loan business for the long haul, or it may end up pushing both risks and rewards onto more traditional banks through partnerships.

4 Amazon Banking Services Disrupting the Industry. Is an Amazon bank in our future? Well . . . Maybe, maybe not. But there are tons of cool Amazon banking services out there already. Check them out. #amazon #banking4. Amazon Credit Cards

If you're anything like me, this is probably the Amazon “banking” service you use the most. I've had an Amazon rewards credit card for a decade now. My current card offers five percent in rewards points when I shop at Amazon and Whole Foods.

As with a lot of its financial services, Amazon doesn’t run the credit cards directly. Instead, the cards are issued through partnerships with traditional banks. You can get a card for yourself, but businesses can also get corporate cards.

These could be pretty useful if your business has reasons to buy a lot of supplies from Amazon.

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Final Thoughts on Amazon Banking Services

Honestly, I'm not quite sure what to make of what Amazon is doing in the financial services industry. If I were a traditional bank, I'd be pretty worried about Amazon's ability to capture some of my core business.

Banks make a lot of money on processing payments, for example. If Amazon wants a big cut of that, it could spell trouble for traditional banks' bottom lines.

Consumer and regulator scrutiny may also become a factor.  As Cooper Smith points out, “In retail, there is a precedent. 

“Amazon is already under scrutiny by politicians over whether its size and influence stymie fair market competition,” he says. “For Amazon to expand its operations in financial services beyond what it already does in payments would be a brazen move.”

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As a consumer myself, I'm cautiously optimistic that services like Amazon Pay could make purchases and donations to charity easier. I also like the concept of Amazon Allowance, especially if you're trying to steer your kids toward books rather than other things they might buy.

As always, though, we take care that “easier” doesn't mean “easier to run over budget,” so we should be as careful about Amazon banking services as we are about our credit cards. Buyer, beware!