The ecommerce giant Amazon is planning to stop accepting payments made with Visa credit cards in the UK, starting next year. Customers are being encouraged to change their default payment method. “We’re very disappointed that Amazon is threatening to restrict consumer choice”, said Visa.
Popular marketplace Amazon has told customers that, starting January 19, it will no longer accept Visa credit cards issued in Britain. It claims that it will make this change due to high fees charged by Visa for processing transactions.
Higher fees after Brexit
The cap on interchange fees which is valid in the EU, no longer applies in the UK after Brexit. This has allowed card networks like Visa and Mastercard to raise their charges. Both companies have raised the fees it charges merchants for processing transactions between the UK and the EU, as a result of this.
Customers can still use Visa debit cards
Yet, Amazon will only restrict Visa credit card payments. Customers were told that they will still be able to use debit cards, including those issued by Visa, and non-Visa credit cards like Mastercard and American Express. Users are encouraged to update their default payment method now.
“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”, said a Visa spokesperson to CNBC.
‘These costs should be going down over time with technological advancements.’
A spokesperson for 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.”
Smaller businesses are also affected by the high fees charged by card networks, but they usually aren’t in a position to negotiate. An ecommerce giant like Amazon, who is quite successful in Europe and continues to expand there, could certainly have bargaining power over Visa to lower its fees. It remains to be seen, however, whether bargaining about high fees will also have a positive outcome for smaller businesses.