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11/17/2021

Report: Amazon to stop accepting U.K.-issued Visa credit cards in 2022

Dan Berthiaume
Senior Editor, Technology
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This holiday season could be the last time Amazon shoppers can make purchases with Visa credit cards issued by U.K. banks.

According to CNBC, Amazon has notified some U.K. customers that as of Jan. 19, 2022, it will no longer allow them to make payments with Visa credit cards issued in the U.K., due to high transaction processing fees the e-tailer says Visa is charging.

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.

Amazon will still accept Visa debit cards issued in the U.K., as well as credit cards issued by other providers, such as Mastercard. In a statement to CNBC, an Amazon spokesperson blamed high fees charged by Visa for its decision.

“The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers,” the spokesperson told CNBC. “These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise.”

Meanwhile, a Visa spokesperson told CNBC that the company is disappointed, but still trying to work out a resolution with Amazon.

“U.K. shoppers can use their Visa debit and credit cards at Amazon U.K. today and throughout the holiday season,” said the Visa spokesperson. “We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon U.K. without Amazon-imposed restrictions come January 2022.”

According to Seeking Alpha, analysts from Barclays and Morgan Stanley have both suggested this move is a bargaining ploy by Amazon.

Barclays analyst Ramsey El-Assal said amazon is 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 sees 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 expects Amazon and Visa to reach an agreement.

“We would be buyers on Visa's headline weakness related to Amazon," Facuette said in a note to clients. "Amazon appears to be conducting a market test in a few of its geographies to gauge usage elasticity for Visa credit cards."

However, new analysis of Google search data by Casinosites.org reveals that online searches for “Mastercard” rose 1,300% compared to the average volume on Nov. 17, 2021, which the company says is an unprecedented one-day spike in Google search volume. The data also revealed that searches for “cancel Visa” skyrocketed over 700% on Nov. 17, nine times the average volume in one day.

A Casinosites.org spokesperson commented on the findings. 

Amazon is the ultimate player in the online retail industry, and as a significant percentage of the U.K. rely on Amazon deliveries to meet their shopping needs, news of the company no longer accepting Visa cards will have a significant impact on Visa users,” said the spokesperson. “The sudden spike in searches for Visa alternatives such as Mastercard on the day of the announcement shows just how vital online shopping is to our lives today. Losing business with a digital retail giant such as Amazon could be very damaging to Visa, and hopes may well be high within the organization that they can reinstate a working relationship with Amazon”