Curious though; can you ELI5 who actually pays the interest?
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I met a banker the other day and I asked him simply "how does one actually found a bank" his reply;
"Oh it's really simple, have $30,000,000 and you can create your own bank!"
Simple!
ELI5: Lots of people have business ideas that can make money, but often they need to have a small pile of money in order to make more money. Let's imagine you are such a person. I lend you money to start your business, then your business makes lots of money, and you pay me back. That's a good deal for you, but not for me. Your business might not work out, and you might lose all my money. I'll still lend you the money, but I want you to pay me back more money since I took this risk for you.
That's where the money paid in interest comes from.
Similarly, you might replace 'start a business' with 'buy a house' or 'buy a car'. You don't have enough money to do so right now, but you know that your life will be improved by having these things, so you borrow money to do them. The people lending you the money won't do it for free.
Less ELI5: Alternatively, the businesses holding this money for four weeks will estimate what the lowest amount they'll be carrying over the next 5 years will be, then just go and invest that amount in stocks, bonds, etc. Since their balance will never fall below that amount, the money is effectively an interest-free loan from Amazon that they use to make interest-earning investments with.
It is not really an innovation. This is basically private money that can only be used at a particular store.
At the dawn of industrial revolution large mills used to pay their workers with "scrip" -- a private type of cash that could only be used in company-owned stores. The company basically double-dipped: first profiting from the labor of the workers, then profiting from the mark-up on the goods and services "sold" to the workers.
Once you put money in Amazon cash, it goes to Amazon and nobody else. It is no longer "cash" or legal tender if you can't use it wherever you want.
I worry, however, about financial products like this that get aimed at people who don't have bank accounts. They're a particularly vulnerable population.
Honestly I think that's most of the reason why Ralphs sells Google Play/iTunes/Best Buy/Amazon gift cards. People buy them with cash and then use them for themselves.
Is this really any different then buying an Amazon gift card other then you can choose the amount to put on it?
2) you don't have to convert ALL of your cash into Amazon credit. You can allocate a portion that is useful to find cheaper/better selection of products on Amazon. They rest you can spend wherever/whenever you want
What if Amazon, with the fact that they built that huge CIA data center (think AWS for the CIA, plus the other contracts, plus the WAPO purchas...) is now doing an op to determine where grey money may be going and on what...
Think of it as a data op...
the infra to determine where monied intentions are going - it has nothing to to with terrorism, but everything to do with totalitarianism.
The bank that Amazon holds its money in.
> Simple!
Well, it is simple, it's a very straightforward method. Simple doesn't mean easy.