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Thursday, December 2, 2021

Amazon stops accepting Visa credit cards in the UK to compete for “high” fees




Amazon will stop accepting payments with Visa credit cards issued in the UK from the beginning of next year because the online giant is trying to resist the fees charged by the dominant credit card network.

In the announcement received by some customers this week, the e-commerce group cited “the high fees that Visa charges when processing credit card transactions.”

Amazon’s move is the latest in the ongoing struggle between retailers, banks and the payment network dominated by MasterCard and Visa.

This change will not affect Visa’s debit cards, credit cards issued outside the UK, or credit cards provided by competitors such as MasterCard.

Visa shares fell more than 5% in early trading.

Amazon is using alternative payment methods to provide customers with a discount of £20 on their next purchase to encourage them to switch to a different payment method.

Suggested methods include Amazon-branded credit cards from American Express and MasterCard. And the ocean credit card issued by Capital One. Visa currently does not offer Amazon-branded credit cards.

Visa stated that it is “very disappointed by Amazon’s threats to restrict consumer choice” and added that it will “continue to work hard to find solutions so that our cardholders can use their favorite Visa credit cards on Amazon UK in January 2022. Subject to restrictions imposed by Amazon”.

Amazon said that the cost of card payments is an obstacle to providing customers with the best pricesWith the rapid changes in the global payment landscape, we will continue to innovate on behalf of our customers to add and promote faster, cheaper and more inclusive payment options for our global stores. “

A person familiar with Amazon’s thinking said that the decision did not reflect specific costs, but Visa has used its position to maintain high costs. Earlier this year, Amazon announced that it would impose a 0.5% surcharge on purchases made with Visa credit cards in Australia and Singapore.

Visa said the domestic transaction program fees paid to it averaged less than 0.1% of the transaction value. Mastercard fees are considered similar.

A report released on Wednesday by the British payment system regulator noted that Mastercard and Visa accounted for the vast majority of transactions in the UK. It found that in recent years, the fees paid by card collectors to the two companies have increased significantly, more than doubling from 2014 to 2018, although their proportion of costs is still lower than exchange fees.

After Brexit and Mastercard and Visa’s decision to increase exchange fees this year, the issue of fees has become more sensitive-something they cannot do under the EU ceiling.

Mike Cherry, chairman of the Small Business Federation, said: “When online giants start to challenge, you know the situation is getting more and more critical,” he said. Small businesses often charge heavier fees.

Nationwide, one of the few British banks that issue credit cards on the Visa network, declined to comment. Co-op, which also issues Visa credit cards, did not respond to a request for comment.




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