In Battle for E-Commerce Dollars, Free Shipping Is Payment Networks’ Weapon of Choice
Call it the Amazon Prime Effect.
With more and more people expecting some type of free shipping option when shopping online, traditional and digital payment networks are increasingly stepping in to foot the bill.
The latest payment network to open up its wallet to offer free shipping is MasterCard, which yesterday announced the Free Shipping by MasterCard shopping portal, which gives online shoppers six months of free, two-day shipping at Best Buy, QVC, Macy’s, Kohl’s and Walmart when they pay with a MasterCard debit or credit card.
MasterCard cardholders have to do a bit of work to earn the free shipping — start their shopping on the MasterCard free shipping site, pay the shipping charge up front, and then email their digital receipts to MasterCard to get a statement credit — but that makes the program an easier sell to participating e-commerce sites, who don’t have to deal with any major tech integrations to participate.
The MasterCard program follows similar moves by other payment networks. In the spring, American Express offered its cardholders a free one-year subscription to ShopRunner, the startup in which it recently invested, that offers its members free two-day shipping at partner e-commerce sites, including Lord & Taylor, Kenneth Cole and Fanatics.com.
(Update 6:41 pm ET: In an email, ShopRunner CEO Scott Thompson points out that American Express has now made free ShopRunner memberships a permanent benefit for all of its consumer and small business cardholders; it’s no longer simply a promotion for a one-year subscription.)
And, in October, PayPal partnered with sister entity eBay Enterprise to give free two-day shipping to shoppers who pay with PayPal through the online sites of a handful of retailers, including Levi’s and Aeropostale.
Visa, for its part, offers a broad array of discounts, only some of which focus on free shipping.
Overall, the various programs will likely ratchet up the pressure on online retailers who don’t have a free-shipping option.
“It’s going to be hard for many merchants to individually fund free-shipping programs on their own,” said Anant Nambiar, group head of global debit product management at MasterCard. “At the same time, it’s going to be hard to not offer it at all.”