Banks make money in two ways:
– Interest on balances
– Transaction fees on moving money

The first is well under seige from many secondary insitutions, financial planners, and brokers. But the threat to the second one is less well understood.

Credit cards are a major source of transactional revenue for Banks. Deep in this article is the comment that Amazon are considering getting into the payments space, and not through Paypal. If we let our minds wander, consider the attractiveness of an Amazon card – it could be used online, or offline. Its usability online would far surpass anything we have seen because they understand the medium. Offline, the “cool factor” of an Amazon card would be remarkable.

Now one constraint for offline, would be getting access to payments networks, and MCI/ Visa would not take that lightly. But there are enough questions being asked of traditional payments methodologies, and their associated costs, that its not too incredible a notion to see Amazon have success in such a move.

Net Threat
An easy-to-use Amazon-embedded payments function that resolved retailer liability issues would very quickly get Web traction.