Amazon would no longer accept Visa credit cards for payment due to the high fees of processing credit card transactions in UK.
Amazon will no longer accept Visa credit cards for payment starting 19 January 2022 because of the high fees of processing card transactions in UK.
Amazon said that the cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should go down because of advancement in technology, but then, it continues to stay high.
Amazon and Visa’s battle began in Singapore
The battle between the two companies began in Singapore in September. Amazon started adding a small surcharge to any purchases made with a Visa credit card in Australia. Now, the online retailer has made it official that it will no longer accept payments from Visa credit cards. Customers can still use all debit cards, including Visa debit cards and Visa credit cards issued outside of UK to shop on Amazon.co.uk.
“The cost of accepting credit card payments should go down over time to allow merchants to reinvest savings into low prices and shopping enhancements for customers. Despite technical advancements, some cards’ cost of payments continue to stay high or even rise,” Amazon said.
Visa said it is very disappointing that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins.
Al Kelly, CEO of Visa said Amazon’s decision to stop accepting Visa credit cards in UK was “odd and the criticism that Visa fees are too high is inaccurate. MasterCard carries a similar fee to Visa in UK but wasn’t singled out like Visa.
“I find it quite odd that they’re claiming they did this because of high cost of acceptance in UK. It’s just absolutely inaccurate,” Kelly said.
Kelly added that “Clearly, we’re in a challenging negotiation. What’s different here is that Amazon, unfortunately, decided to take the negotiation challenges that we’re having in public and oddly has chosen to threaten to punish the consumers”.
Visa debit cards and credit cards issued outside UK can still be used
Amazon’s customers can still use Visa debit cards, MasterCard and American Express credit cards and Visa credit cards issued outside UK. It will give GBP 20 discount on the next purchase if users nominate a debit or non-Visa credit card as its default payment method.
In UK, Visa credit cards had the smallest share of all card purchases. The broad industry data showed that Visa credit cards account for less than 7% of all card-based purchases in U.K. at Amazon.
Amazon said Visa was more uncooperative compared to other payment services in negotiations to reduce costs over time. “Visa is not working towards the same goal,” it said.
In recent years, Visa faced bigger issues with Walmart stores and Kroger Co, two huge retailers in US over its charges but they reached private settlements.
Amazon announced various deals with companies such as Venmo and Affirm Inc. that will give US shoppers another method to pay, thus avoiding Visa. The eCommerce giant also plans to shift its popular credit card to MasterCard. Amazon has set up its own buy now pay later (BNPL) service in some countries to increase the payment options which is the fastest and cheapest to use. Being cut off by one of the largest retailers in the world could put a dent in the network's payments volume, as UK is a major card market for Visa.