Amazon Coins coming for US Kindle payments

Amazon CoinsAmazon have announced that they’ll soon be launching Amazon Coins, a new virtual currency for U.S. customers to purchase apps, games, and in-app items on Kindle Fire.

Amazon Coins is an easy way for Kindle Fire customers to spend money in the Amazon Appstore, offering app and game developers another substantial opportunity to drive traffic, downloads and increase monetization according to Amazon.

When Amazon Coins launches in the U.S. this May, Amazon will give customers tens of millions of dollars’ worth of free Amazon Coins to spend on developers’ apps on Kindle Fire in the Amazon Appstore. Amazon will also make it quick and easy for customers to buy additional Amazon Coins using their Amazon accounts.

This is a smart move on several counts – by dropping a bunch of coins into Kindle owner’s accounts they will of course be highly likely to spend them. The danger for consumers is that “Amazon Coins” is like monopoly money – it doesn’t matter how much you spend because it’s not real money. Of course to top up your Amazon Coins you have to pay, but when it comes to spending it doesn’t feel like it’s costing you actual cash.

It’s good news for developers and I would expect a ton of new Kindle apps to be developed in time for the launch of Amazon coins. Get stuck on a game and need a power up, spend a few more Amazon coins and the 70% of the new micropayments will be dropped into the developer’s account. There’s no integration work for them to do and the developer earns the same regardless of whether the user pays with Amazon coins or with real money.

Will Amazon coins catch on? Probably. Will they give a huge boost in the short term to development of Kindle Apps boosting Amazon’s profits? Almost certainly. If nothing else topping up your Amazon coins in advance means the money gets out of your bank account and into Amazon’s sooner and whatever balance you hold in Amazon coins is a few cents more working capital and cash in the bank for Amazon to make use of.