Consumers caught in middle as Amazon, Visa clash over fees

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Customers stuck amid escalating dispute between Amazon and Visa over transaction fees

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Seattle-based Amazon and San Francisco-based Visa are the two biggest forces in retail, and their performance on fees is an inflection point in the payments industry, said Laura Hoy, equity analyst at Hargreaves Lansdowne.

“Historically, Visa cards have been able to charge whatever they see fit because of their vast network of users – not accepting Visa has meant cutting off a large pool of potential customers,” Hoy said. “More merchants accepting Visa meant more customer sign-ups, and the virtuous loop going further back.”

Hoy said Amazon hopes to break this chain by cutting the card company out of its payment options in the UK, and it’s probably one of the only players with enough power to do so.

According to the industry publication, the Nilsson Report, Visa is the leading payment network in Europe, accounting for 58% of the market, while MasterCard has 41% and American Express has 1%. Visa has a similar footprint in the US, where it has about half the market, while its two rivals together account for about a third.

In the US, Amazon may drop Visa as the provider of its Prime credit card. A spokesperson said it is in talks with MasterCard and American Express as part of a standard review of its co-branded credit card agreement.

Merchants have been grumbling for years about card fees, which include various payments to banks on either side of the transaction and the card network itself.

In the UK, the British Retail Consortium industry group has warned that “outrageous tariff increases” increase the costs consumers pay for goods and services. The country’s Supreme Court also ruled in 2020 that interchange fees, which are collected by a buyer’s bank, were illegal.

The decision came shortly before the United Kingdom left the European Union, resulting in increased interchange fees in the UK as card companies were no longer required to adhere to the bloc’s cap on those charges.

According to the British Retail Consortium, major card brands have raised fees on certain transactions between the EU and the UK from 0.3% to 1.5% before Brexit.

Meanwhile, other fees paid for card networks in the UK also doubled between 2014 and 2018, the group said.

Andrew Cregan, the group’s payment policy advisor, said: “With retailers now spending more than £1 billion ($1.3 billion) to accept card payments, it is no surprise that many retailers are affected by these rising fees. Disappointed.”

It urged regulators to tackle what they called “anti-competitive card fees.”

“Ultimately, it will be the consumers who will bear the higher prices unless these rising costs can be brought on heel,” Cragan said.


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