Amazon to ban Visa credit cards from January

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A dispute broke out between Amazon and Visa today over the use of credit cards on the internet giant’s website.

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Amazon today said it will stop taking payments with Visa credit cards issued in the UK, citing high costs charged by the card company.

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An email to customers said: “Starting January 19, 2022, we will unfortunately not accept Visa credit cards issued in the UK, as Visa fees are high for processing credit card transactions.”

Customers were advised to update their payment options.

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Amazon said: “The cost of accepting card payments remains a deterrent for businesses striving to provide the best value for customers. These costs should decrease over time with technological advancements, but instead they remain high. Or keep growing.”

The move comes after Visa increased fees last month. Financial Times reported Earlier this year Visa will increase the fee on transactions between the UK and the EU from 0.3% to 1.5% from October. Amazon.co.uk is operated by the company’s Luxembourg business, its European headquarters.

So-called card ‘interchange’ fees levied by companies such as Visa and Mastercard were limited under EU rules but Brexit removed that barrier.

Amazon said: “With the rapidly changing payment landscape around the world, we will continue to innovate on behalf of customers to add and promote faster, cheaper and more inclusive payment options in our stores around the world.”

Visa reacted angrily.

It said: “We are deeply disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choices are limited, no one wins. We have a longstanding relationship with Amazon, and we continue to work toward a resolution.”

The decision to stop card payments is a serious blow to Visa and consequences for arch rival MasterCard. Amazon said Mastercard, Amex and Eurocard will still be eligible.

James Andrews, personal finance editor at Money.co.uk, said: “We hope that Visa and Amazon will settle their differences before the ban goes into effect on 19 January, but in the meantime it would be wise to check your cards now – and if your If you have an option, consider switching to MasterCard.”

Visa’s shares were down 2% at the pre-market in New York.

Simon Taylor of consultancy 11FS told the Standard: “I think it’s a negotiating strategy from Amazon more than anything. I think we’re going to see a lot more of it.”

Amazon is putting pressure on Visa all over the world. The company imposed a 0.5% surcharge on Visa credit card transactions in Singapore in September and in Australia in October.

Industry experts say that MasterCard charges slightly higher fees than Visa. Visa has fewer credit cards in the UK than its rival and Rob Fernandes, chief product officer at payments business Deco, said Amazon “may be A/B testing on the ability to close credit cards, testing on smaller groups” “

Roger D’Eth, Head of Ecommerce at TrueLayer, said: “The news that Amazon will stop accepting UK-issued Visa credit cards should not come as a surprise. Merchants are increasingly worried about rising fees from the card network, which can lead to transaction-related transactions. The cost of giving adds up and directly impacts their revenue.”

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