Well, eBay has Paypal.
Amazon wants to show that they also has one of their own.
But in order to compete, Amazon will have to eat the fees for now. If they don't, active users will stop using them and closing their accounts. I am sure they realized that too. Amazon market cap is over $119 billion as of today, these fees are so tiny, not even a drop in the bucket. But what if they spin off Amazon Payments or sell it? Don't you think they could claim how valuable it is since they have more active users?