Amazon.com distributed tens of millions of dollars in new Amazon Coins virtual currency earlier this week by depositing 500 Coins, the equivalent of $5, into the accounts of every customer using a Kindle Fire. The company will also offer Coins at discounts of up to 10 percent when purchased in bulk. In an effort to increase customer loyalty, the Coins can be used for products and services available at the Amazon Appstore and within Kindle Fire tablet apps.

“Owners of the Android tablet can now use Amazon Coins to purchase apps, games and in-app items, such as virtual goods or additional game content, in the Amazon Appstore and on Kindle Fire,” reports Internet Retailer. “For customers, Amazon Coins is an easy way to purchase apps and in-app items on Kindle Fire, and for developers it’s another opportunity to drive traffic, downloads and increased app monetization.”

Mike George, vice president of apps and games at Amazon, suggests this is only the beginning for Coins. “We will continue to add more ways to earn and spend Coins on a wider range of content and activities,” he explains.

“The likely benefits for Amazon in creating a virtual currency relate to loyalty, buying behavior and cost,” says Colin Sebastian, senior analyst at private equity firm Robert W. Baird & Co.

“Customers that purchase and use Coins will be more loyal to Amazon, as they are invested in the platform,” he adds. “Likewise, once a consumer purchases virtual currency, they purchase more products more frequently. In terms of costs, Amazon can probably save some money on credit card transaction fees by lumping fewer and larger purchases of Coins in place of more frequent and smaller purchases of digital media and games.”