A row broke out between Amazon and Visa today over the use of credit cards on the internet giant’s website.
An email to customers said: “Starting 19 January, 2022, we will unfortunately no longer accept Visa credit cards issued in the UK,â¯due to the high fees Visa charges for processing credit card transactions.”
Customers were advised to update their payment options.
Amazon said: “The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise.”
The move comes after Visa increased fees last month. The Financial Times reported earlier this year that Visa would raise fees charged on transactions between the UK and EU from 0.3% to 1.5% from October. Amazon.co.uk is operating by the company’s Luxembourg business, its European headquarters.
So-called card ‘interchange’ fees charged by companies like Visa and Mastercard were capped under EU rules but Brexit removed that barrier.
Amazon said: “With the rapidly changing payments landscape around the world, we will continue innovating on behalf of customers to add and promote faster, cheaper, and more inclusive payment options to our stores across the globe.”
Visa reacted with anger.
It said: “We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins. We have a long-standing relationship with Amazon, and we continue to work toward a resolution.”
The decision to block card payments is a serious blow to Visa and a result for arch rival Mastercard. Amazon made a point of saying that Mastercard, Amex and Eurocard will still be eligible.
James Andrews, personal finance editor at money.co.uk, said: “Hopefully, Visa and Amazon work out their differences before the ban comes into force on January 19, but in the meantime it would be wise to check your cards now - and think about switching to a Mastercard if you have the option.”
Shares in Visa were down 2% in the pre-market in New York.
Simon Taylor of consultancy 11FS told the Standard: “I think this is a negotiation tactic from Amazon more than anything. I think we’re going to see a lot more of this.”
Amazon has being putting pressure on Visa around the world. The company introduced a 0.5% surcharge on Visa credit card transactions in Singapore in September and in Australia in October.
Industry experts said Mastercard charged slightly higher fees than Visa. Visa has fewer credit cards than its rival in the UK and Rob Fernandes, chief product officer at payment business Deko, said Amazon could be “A/B testing on the potential to turn off credit cards, tested on smaller group.”
Roger De’Ath, head of ecommerce at TrueLayer, said: “The news that Amazon will stop accepting UK-issued VISA Credit Cards shouldn’t come as a surprise. Merchants continue to be stung by rising fees from the card networks, which increase transaction costs and directly impact their revenues.”