Amazon.com Inc. has millennialshoppers nailed down. And their parents. And most of theirgrandparents.

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But one group of potential customers has eluded the world'sbiggest Internet retailer.

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Teenagers, otherwise known as Generation Z, with their lack ofdebit and credit cards, their absence of bank accounts and theiroverwhelming preference for actually putting on clothes and goingto physical stores to buy things they could purchase online, pose abig challenge to Amazon.

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Amazon's answer: The internet behemoth is in early discussionswith banks including JPMorgan Chase & Co. and Capital OneFinancial Corp. to create a product similar to checking accounts,according to people familiar with the matter who requestedanonymity. Amazon aims to tailor the accounts to appeal especiallyto youngsters and those who own no plastic in their wallets, thepeople said.

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“The sooner you can start collecting information on them, thebetter prepared you are,” said Tim Barefield, a managing directorat the consulting firm Kotter International. “For Amazon, it'sanother way to expand their brand. Their brand is reaching outevery place that their tentacles can reach out to.”

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The move shows Amazon's recognition that digital accounts forminors potentially lock in lifetime customers before they evenleave their parents' house. Amazon is savvy about its users' lifecycles. It offers new parents discounts on diapers and baby food.It gives college students discounted Amazon Prime memberships,providing free shipping and access to streaming video so youngadults will already be Amazon shoppers when they start making moreof their own spending decisions.

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Pseudo Card
Since many young people don't qualify for credit cards, Amazoncreated a pseudo-debit card called Amazon Cash that lets teenagersdrop off money at drugstores such as 7-Eleven Inc. and CVS HealthCorp. and add it to an Amazon wallet they can use online.

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But Amazon has long known the process is clunky and has wantedto take steps to make it easier for customers without bank accountsto shop on its website. Walmart Inc. and American Express Co. offeraccounts called Bluebird that have made inroads with teens.

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Amazon, led by billionaire Jeff Bezos, is trying to stay on topeven as it had revenue of $178 billion last year, a 31% jump from2016 and an almost 2,500 percent increase from 2004, when many ofthese potential new customers were born.

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Service Charges
Children under the age of 18 typically aren't able to sign up for abank account without parental consent. Checking accounts for highschool students often come with monthly service charges andoverdraft fees.

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So there's a chance for Amazon to improve the bankingexperience, said Stuart Sopp, chief executive officer of Current, astartup that offers debit cards to teens.

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“I'm sure Amazon is scaring the hell out of every singleregional bank and credit union right now,” Sopp said. “The bankshave very clearly not serviced these demographics, so there'sopportunity.”

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If Amazon could deliver a better banking experience fordigitally savvy youngsters who are used to getting what they wantwith a few swipes or clicks, they might have banking customers fora long time, said Eric Marks, a senior director at the financialconsultancy West Monroe Partners.

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Amazon might also entice teens with its personal assistant Alexa. Such devices arepopular among teens looking for a convenient way to pay, said GavinRosenberg, a senior director at the payments processor Total SystemServices Inc.

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“The younger generations are less concerned about privacy, sothey're more apt to use them,” Rosenberg said.

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Adults Too
The marketing opportunity doesn't end with teenagers. Thee-commerce giant could also end up persuading people to close theirexisting bank accounts and open a new one with Amazon, according toa Cornerstone Advisors study published in January. It would also bea chance for a bank to partner with the online gargantuan.

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“Right now, banks might not be offering exactly what millennialswant or need,” said Marielle Schurig, a financial adviser at UBSGroup AG who works with high-net-worth millennials. “A lot ofmonthly statements don't offer insights or tools to manage yourrecords or analyze your spending to budget or save for the future”— something Amazon might provide.

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Even with as much as a $10 monthly fee, 27% of young millennialspolled said they would open an additional checking account withAmazon. One-tenth said they would close their existing account andgo with Amazon.

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“This is music to Amazon's ears,” Cornerstone said in itsreport. “Why would they want to offer a free checking account whenthey can bundle the services of various providers on their platform— merchants and financial services providers — and charge a fee forit. A fee that consumers are willing to pay.”

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