This strategy would help Amazon lower fees it pays to financial firms and give it a bigger window into customers’ income and spending habits.

(Bloomberg)—Amazon.com Inc. is in talks with JPMorgan Chase & Co. and Capital One Financial Corp. about offering the tech giant’s millions of customers a product similar to a checking account, the Wall Street Journal reported.

The target is younger consumers and people without checking accounts, the newspaper said, citing people familiar with the matter. The strategy would help Amazon lower fees it pays to financial firms and give it a bigger window into customers’ income and spending habits, according to the report.

Amazon is No. 1 in the Internet Retailer 2017 Top 500.

The offering, if it comes to fruition, would be yet another link in Amazon’s extensive web of ways to touch every aspect of people’s lives, from food shopping at Whole Foods, to reading or listening to books, streaming music and videos and its Alexa voice assistant. After upending other retail businesses including groceries and health care, banks have long feared they might be next.

The finance industry has been concerned that major tech companies, not only Amazon but also Facebook Inc. and Apple Inc. (No. 2), might try to sideline banks by handling more of their customers’ electronic payments, offering financing or accepting deposits—even if those services open them up to more regulation.

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Financial forays

Amazon has already made forays into the financial arena during its transformation from a book store more than 20 years ago. Amazon Pay allows consumers to pay for products on third-party sites without reloading their credit card information. More than 33 million people use the payment system, and Amazon has lent more than $3 billion to small businesses that sell on its platform since 2011, according to a research report by CB Insights earlier this year.

The e-commerce giant also offers a pseudo-debit card, Amazon Cash, that lets consumers add cash to an Amazon wallet and purchase items online without a credit card.

And last year, Amazon dipped its toes into the deposit business with Prime Reload, which gives customers a 2% bonus when they use their debit card to move funds from a bank account to an Amazon balance that they use for transactions on the website. The move means Amazon paid less in fees to card networks like Visa Inc. and Mastercard Inc.

Fintech collaboration

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“It seems like another example of fintech collaboration with existing banks rather than a true disruption,” Guy Moszkowski, an analyst at Autonomous Research LLP, said in an email.

Amazon shares were little changed at $1,488.82 at 10:10 a.m. in New York. JPMorgan shares were down less than 1 percent to $112.39.

Amazon already has a co-branded credit card with JPMorgan, and the two companies’ CEOs are working together, along with Warren Buffett’s Berkshire Hathaway Inc., on finding ways to bring down the cost of health care for their employees. It’s too early to say whether the checking-account venture would include bill-paying services or access to nationwide ATMs, the Wall Street Journal said.

Policy shift

Prime Reload was seen as a way for Amazon to improve its appeal to lower-income customers who might not qualify, or want, the co-branded credit cards it already offers with JPMorgan and Synchrony Financial. Those cards come with much as 5% cash back on purchases.

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While U.S. policy makers have for years been skeptical of letting big companies move into banking services, that may be changing. Keith Noreika, the former acting Comptroller of the Currency, said last year that it’s time to reconsider whether the traditional separation between lending and retailing should be maintained.

Despite the possibility of tech giants like Amazon wading into finance on their own, some analysts think partnerships like this one are the more likely path.

“It’s a logical extension that banks would partner with tech firms,” Mike Mayo, an analyst at Wells Fargo & Co., said.

Capital One and Amazon didn’t immediately respond to phone and email requests for comment. A representative for JPMorgan declined to comment.

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