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Amazon credit cards 'stand to benefit' from Visa ban

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Amazon is considering dropping Visa as partner on its popular US co-branded credit card. Photo: Getty Images
Amazon is also considering dropping Visa as partner on its popular US co-branded credit card. Photo: Getty Images

Amazon’s decision to ban Visa credit cards on its platform could end up benefiting the retail giant’s own credit cards, a new report said.

Earlier this week Amazon (AMZN) said it will stop accepting payments made by UK-issued Visa (V) credit cards from next year.

The company blamed the decision on the card company charging high fees to process transactions over a number of years, with no additional value to its service.

A report by data and analytics company GlobalData states that the move could end up boosting adoption of Amazon’s own credit card offerings.

The report noted that Visa holds the second largest credit cards market share in the UK, with close to 20 million cards issued in 2021 — behind Mastercard (MA), which has around 38 million.

Read more: Amazon to stop accepting Visa credit cards issued in UK

“With both looking to increase fees since Brexit took away their 0.3% cap for online cross-border transactions, Amazon’s decision to only ban one of these companies seems odd – until you remember that Mastercard is Amazon’s credit card issuing partner," said Chris Dinga, payments analyst at GlobalData.

He said “this represents a unique opportunity for both Amazon and Mastercard, as they can take advantage of the situation to promote the Amazon credit card to customers.”

The cards Dinga was referring to are the Amazon Platinum Mastercard and the Amazon Classic Mastercard - Amazon cards co-badged by Mastercard.

Amazon currently also has Visa co-branded credit cards, but media reports indicate Amazon is considering dropping Visa as partner. 

The Amazon card is one of the industry’s largest co-branded portfolios, and the company is using talks to renew the agreement as a way to secure better terms from Visa, according to people familiar with the matter.

A spokesperson for Amazon said they do not have any comment on the GlobalData report but wanted to emphasise that Visa is a service provider to Amazon, not a competitor, and that its action to ban Visa credit cards is entirely unrelated to its own payment offerings. 

They added that it did not make sense for the company to inconvenience customers and push a particular payment method.

Mastercard declined to comment.

Dinga said UK-issued Visa credit card customers will have to either transfer to their debit card or find a new credit card provider if they want to remain an Amazon customer.

He also said the move will mean a significant loss of revenue for Visa in the UK and, if the issue of interchange fees isn’t addressed, retailers will see their profit margins squeezed.

The report also said that while credit cards are dominant players for non-cash transactions, there is growing competition from buy now, pay later (BNPL) providers and alternative payments such as Venmo represent.

“High interchange fees could accelerate the adoption of BNPL services by retailers," said Dinga.

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