Seattle-based e-commerce giant Amazon.com Inc. AMZN is testing an online lending platform for the third-party sellers on its platform, Business Insider reported Monday.
What Happened
The platform, which has been in beta testing since at least late last year, according to Insider, gives the sellers an option to choose the bank they want to get the loans or lines of credit from.
Some of the lenders on the platform include Amazon's own lending arm, Goldman Sachs Group Inc.'s GS consumer banking division Marcus, and smaller regional players like Lendmark Financial Services, Inc and Finbank PLC.
The platform offers loans as little as $10,000 and up to $1 million, with an annual percentage rate between 12% to 15%, the Insider learned. The sellers can choose a repayment timeline between three months to a year.
Amazon is touting it as "a loan in minutes," the Insider said. The sellers will, however, be completing the application on the website of the lender they choose, in what is to be a quick four-step process.
If the lender approves, the merchants will get the requested funds in their bank accounts.
Some of the sellers are skeptical about the "data sharing agreement" they will have to sign to apply for the loan, the Insider said. Amazon requires the seller information from its platform to be shared with the lender to help them make a decision, but the sellers are unsure how the third-party will handle the information.
Why It Matters
The Financial Times reported earlier in the day that Amazon has partnered with Goldman Sachs to offer loans to sellers on its platform. According to the Insider report, Amazon isn't just partnering with a bank, but creating a marketplace of sorts for lending.
Amazon's lending arm Amazon Lending, which has been running in some form since 2011, had focused on smaller term loans. The new platform will give sellers the option to borrow a much larger sum of money, at the same time with the flexibility that comes with obtaining lines of credit.
The online lending platform would only be the latest in a series of attempts from technology giants to establish themselves in the financial services sector.
Alphabet Inc. GOOGL GOOG, Apple Inc. AAPL, and Facebook Inc. FB all offer some financial services to their customers that don't require them to register as a financial institution.
Price Action
Amazon's shares closed 0.23% lower at $2,004.20 on Monday. The shares were mostly unchanged in after-hours trading. Goldman closed 0.53% higher at $239.01.
The shares of Amazon traded as high as 1.98% and Goldman 1.95% after the initial FT report.
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