I think it's more about getting to the segment of customers who do not have credit cards. There's no way amazon is paying the same fee as anyone else in the world for credit card fees, they're the single biggest e-commerce site and have almost certainly negotiated some substantial deals.
> There's no way amazon is paying the same fee as anyone else in the world for credit card fees
I'm not so sure. Is there any actual evidence of large retailers negotiating down interchange fees? Even Walmart resorted to legislative pressure to regulate fees.
The power of network effects is strong. Retailers are reluctant to drop support for consumer-preferred payment methods and lose that business. That gives card networks a lot of negotiating power even with large merchants.
In the late 90s, my rate was 2.75% and the site I was running was very small potatoes. This era of 2.9% being considered standard despite additional competition, greater efficiencies, and higher volume is basically price gouging.
There's basically two reasons for that. One, 2.9% is only standard with premium processors like Stripe and Square. They charge a premium markup over interchange. You can still find "interchange plus" processors which will be much more value priced, although they usually are not as easy to work with.
Two, the underlying interchange rates have risen since the 90s due to reward cards. It's more expensive for merchants, but a lot of that goes into customer pockets via reward programs, so it's somewhat debatable whether it qualifies as price gouging since it's driven by consumer choice.
Very large retailers do negotiate their fees but there's only so low they can go because different parts of the fee go to different entities along the chain (visa/mc, banks, merchant providers, etc.)
