Report: Amazon resolves U.K. credit card dispute with Visa
It looks like Amazon customers in the U.K. can still pay with their Visa cards, after all.
According to CNBC, the e-tail giant has resolved issues it previously had with Visa over the transaction fees the credit card provider charges. In December 2021, Amazon reportedly notified some U.K. customers it would no longer allow them to make payments with Visa credit cards issued in the U.K. as of Jan. 19, 2022.
That deadline was extended in January, and Amazon never actually ceased accepting Visa payments in the U.K. Amazon and Visa have not released any specific terms of the agreement they reached. Amazon’s agreement with Visa covers its global operations, and the e-tailer is also eliminating a 0.5% surcharge it began levying on Visa credit card purchases in Australia and Singapore in 2021.
Visa, as well as competing credit card provider Mastercard, have both raised the interchange fees they charge retailers for processing digital transactions in the U.K. in 2021. Following its formal Jan. 1, 2021 exit from the European Union (E.U.), credit card issuers in the U.K. were no longer restricted by limits on interchange fees that had been set by the E.U.
“We’ve recently reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores,” an Amazon spokesperson said to CNBC. “Amazon remains committed to offering customers a payment experience that is convenient and offers choice.”
In a commentary for Chain Store Age, James Booth, VP and head of Partnerships, EMEA at payment infrastructure provider PPRO said the original move from Amazon to ban U.K.-issued Visa credit cards was driven by wider sentiment in the payments space.
“Card fees are high and businesses are struggling to keep up, being forced to pass down the cost to the consumer.,” said Booth. “Amazon is signaling a move away from cards and towards a more diversified payment ecosystem that offers businesses and consumers greater choice and lower costs
“Seventy-seven percent of global online purchases are not made with an international credit card, but with a local payment method, be it wallets or bank transfers,” Booth said. “In the U.K., 52% of all payments are card-based, with Visa having an 82% market share of that. But this is changing rapidly as new payment methods are picking up pace. Offering a wider, global range of payment options is a good way for businesses to stand out from the competitive e-commerce landscape. But, even more importantly, it can lead to significant cost savings for these businesses.”
When news of Amazon possibly banning U.K. Visa payments first broke in 2021, Seeking Alpha reported that analysts from Barclays and Morgan Stanley were suggesting the move was a bargaining ploy by Amazon. Barclays analyst Ramsey El-Assal said Amazon was engaging in “more of a negotiating tactic, rather than a leading indicator of more fundamental changes to Visa's model."
El-Assal also said he saw little, if any, impact to Visa’s profits as its U.K. debit network is much larger than its U.K. credit network. Morgan Stanley analyst James Faucette said he expected Amazon and Visa to reach an agreement.