Thread by @SimonSaysStocks

"Your margin is my opportunity." - Jeff Bezos

$AMZN is unmatched when it comes to optimizing its business segments to drive synergies

Amazon processed $475 billion in gross merchandise volume and the eCommerce giant receives ~1.6 million orders a day.

That's a lot of payments

Amazon is known for optimizing its operations and then capitalizing on those services by outsourcing them to other companies or consumers. We've seen this many times, for example with AWS or Amazon's logistics division.

Payments and FinTech are $AMZN's next great profit center

Given how many payments Amazon processes, it only makes sense that it expands to optimize its payment rails so that it can lower prices while removing expenses that were considered as the cost of doing business... interchange fees and the card networks

https://twitter.com/SimonSaysStocks/status/1451928167153799172

This is why $AMZN is partnering with $AFRM for BNPL at the POS and in Amazon Pay, its digital wallet

It will also accept Venmo $PYPL

By partnering with these fintechs, Amazon bypasses the card networks while accessing the flow of data from both the consumer and the merchant

Let's not forget that Amazon is the King of analyzing SKU-level data to better understand its customers and capture their business before they even get the checkout page.

"Amazon uses predictive stocking to order and ship items based on their anticipated demand as well. This enables Amazon to offer fast, same-day deliveries while Amazon will be better equipped during times when supplies are in higher demand in certain areas."

$AMZN + $AFRM = Data Lock Match in Heaven

Affirm is the exclusive BNPL for Amazon through Jan 2023

Affirm offers more attractive terms to borrowers because it has deep insights both from the consumer and the merchant.

$AFRM enables merchants to utilize SKU level data while its partnerships with Plaid and $MQ enable data from a consumer’s bank account to be analyzed by Affirm to approve a BNPL transaction in real-time, while bypassing the card networks

Changes to the Affirm and Amazon agreement from August?

Now, Amazon has warrants in Affirm and the deal is exclusive

Below is Max Levchin's response on new updates to the deal from Affirms last ER call:

"So the most important qualitative change here is Amazon had their pick obviously and partners in the space. They tested, they tested us, we passed the test. We passed the test with flying colors and better. And so I think that that's a very important qualitative matter here."

Amazon is aligned with Affirm's best interest now with the warrants and incentivized to use them as its BNPL provider, while Amazon will leverage its deep sets of data with Affirms advanced risk modeling

Amazon will probably work past its issues with Visa in the UK, but it shows that the power of the credit card networks wasn't what it once was.. Even though the card networks still have a massive customer base, there are cracks in the system

https://twitter.com/arampell/status/1435692953058504704?s=20

Consumers will choose with their wallets and Amazon will leverage its wide range of data to offer consumers better payment options at the POS

https://twitter.com/SimonSaysStocks/status/1460957447531773957?s=20

Check out my last note to get my full perspective.

Amazon: Quietly Building A Fintech Giant $AMZN $AFRM $V seekingalpha.com/article/447103…

.@InvestiAnalyst When I saw this yesterday, say it made me think of my note! Hope you enjoy

https://twitter.com/InvestiAnalyst/status/1462929484202582026

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