Sat, 28 May 2022

Amazon UK cancels plan to stop accepting Visa credit cards

Robert Besser
19 Jan 2022, 23:09 GMT+10

LONDON, England: In a statement on January 17, Amazon UK said it has canceled plans to stop accepting Visa credit cards beginning 19th January, saying the change "will no longer take place."

"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," said an Amazon spokesperson, as reported by CNBC.

In November, Amazon announced the ban on accepting VISA cards, citing "high fees Visa charges for processing credit card transactions."

In 2021 Amazon also announced plans to introduce a 0.5 percent surcharge on Visa credit cards in Australia and Singapore.

In response, Visa had said it was "very disappointed" and would work to find a resolution with Amazon.

A Visa spokesperson told CNBC by email, "Amazon customers can continue to use Visa cards on Amazon.co.uk after 19th January, while we work closely together to reach an agreement."

After Brexit, Visa and rival Mastercard hiked their UK interchange fees, as a European Union cap on interchange fees ceased to apply in the country.

While both Amazon and Visa claim the dispute is not related to Brexit, the move was interpreted by experts as a way for Amazon to obtain bargaining power over Visa to lower its fees.

David Ritter, a financial services strategist at IT firm CI&T, said Amazon's move "comes as no surprise" and would have proven difficult as many customers' Visa credit cards are tied to Amazon's own Prime subscription service, as well as to digital wallets, such as Apple Pay, Google Pay and PayPal, according to CNBC.

Other companies have complained about the high interchange fees charged by major card networks, with another notable example being grocery chain Kroger's, which temporarily banned Visa credit cards at some of its stores.

Meanwhile, Visa and Mastercard are facing growing pressure from financial technology start-ups, such as Klarna and Afterpay, which offer "buy now, pay later" services that enable shoppers to split the cost of their purchases over monthly installments.

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