Amazon backs down over threat to ban Visa credit cards

Online retail giant had threatened to stop accepting orders made with Visa credit cards in row over fees

Amazon has backtracked on plans to ban the use of Visa credit cards for UK orders just days before the change was due to take effect.

The two companies said they were working to end a stand-off over fees charged by Visa that would have stopped Amazon accepting its credit cards from Wednesday.

Amazon emailed customers on Monday saying it would continue to let them use their cards while it worked on a deal with the payments company.

Credit and debit card fees paid by merchants in the UK are no longer capped at EU levels of 0.3pc and 0.2pc respectively after Brexit. Both Mastercard and Visa have raised fees to 1.5pc and 1.15pc as a result.

In November, Amazon blamed Visa’s “high fees” for the change, saying that the company’s behaviour over the long term, not the one-off increase after Brexit, was to blame. 

It did not affect Visa debit cards or Mastercard, with which Amazon has its own branded credit card in the UK. 

Major businesses often reach special agreements with the card companies that mean they pay lower fees than standard, and Amazon is believed to be able to extract some of the best rates from them.

The company had offered customers a £20 credit to change their default payment card from Visa, but if large numbers of people had failed to do so, the impending change threatened to erode sales and threaten the company’s reputation for convenience.

It would have also meant that recurring subscriptions, such as its Prime membership service, may have lapsed.

“The expected change regarding the use of Visa credit cards on Amazon.co.uk will no longer take place on January 19,” a spokesman said. 

“We are working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk.”

It told customers: “Should we make any changes related to Visa credit cards, we will give you advance notice. Until then you can continue to use Visa credit cards, debit cards, Mastercard, American Express and Eurocard as you do today.”

Visa said: “Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely together to reach an agreement."

Amazon has previously sparred with Visa in Singapore, where it applies a 0.5pc surcharge to transactions due to what the company says are high fees.

In the UK, credit cards provided by Barclaycard, HSBC and Vanquis use Visa's payment system, with Barclaycard alone having 10m customers.

David Ritter of the consultancy CI&T said Amazon would find it hard to cut off Visa: “Amazon is a retail giant so it has some leverage, but there's no way it won't accept Visa cards. Cards issued by Visa and Mastercard are ubiquitous and many of these cards also sit behind digital wallets like Apple Pay and PayPal.”

About nine in 10 Britons shop on Amazon and its sales were turbocharged by the pandemic. UK revenues rose by 51pc in 2020 to $26.4bn (£19.3bn), making Britain the company’s fastest-growing market.

The incident has drawn attention to the so-called duopoly in payments enjoyed by Mastercard and Visa. 

Roger De’Ath of TrueLayer, a company that helps retailers take payments directly from banks, said: “For too long, cards have been retrofitted into online checkouts, creating an invisible web of hidden costs and unwieldy payment structures that affect the cost base of every single retailer. With new technologies available that can move money at a fraction of cost and time, the industry no longer needs to be held hostage to card networks for all transactions.”

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