'We were terrified': Block co-founder explains how the fintech giant avoided 'death by Amazon'
BARCELONA — In 2014, Amazon launched a product that sounded strikingly similar to something already on offer from Twitter co-founder Jack Dorsey's payments company Square, which is today known as Block.
It was called Amazon Register, and it would let small businesses accept credit card payments using a smartphone or tablet computer, just like Block's technology. There was one key difference, though: Amazon offered processing fees of as low as 1.75%, compared to the 2.75% rate from Block.
«We were still a startup, and Amazon copied our product and undercut our price,» Jim McKelvey, who co-founded Block with Dorsey in 2009, said during a fireside discussion with CNBC at the Mobile World Congress tech show.
«When Amazon does this to a start-up, the start-up dies,» he added. «When Amazon did that to Square, we were terrified.»
Block wasn't unique in facing possible "death by Amazon." The e-commerce giant has waded into several industries over the years, from cloud computing to TV and films. A number of retailers have been forced to either adapt or close down altogether due to the so-called Amazon effect.
The difference with Block, McKelvey says, is that it survived.
«We didn't have the things that they had, so we couldn't do what they were doing,» he said. «So we just kept doing what we were doing and basically ignored them. And it worked.»
A year after Amazon launched Register, the service was discontinued, highlighting the fiercely competitive nature of the digital payments sector. McKelvey says the company even mailed Square card readers to its customers: «They actually were pretty cool about it.»
It's a tale as old as time: a Big Tech firm launches a feature similar to that of a smaller competitor, and that company
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