Amazon and Visa at war in the UK over transaction fees

By Robin Amlot

A spat has broken out between online retail giant Amazon and funds transfer behemoth Visa. Amazon has announced that as of 19 January 2022 it will cease to accept Visa credit cards that have been issued by institutions in the UK. In a message to customers, the blame for its decision was put squarely on ‘the high fees Visa charges for processing credit card transactions’.

Consumers will still be able to shop on amazon.co.uk using Visa debit cards and other credit cards, including Mastercard, Eurocard and American Express are not affected. It is unclear whether the ban on Visa cards in Amazon’s UK store will also affect Visa credit cards issued by institutions domiciled outside the UK.

A Visa spokesperson said: “UK shoppers can use their Visa debit and credit cards at Amazon UK today and throughout the holiday season. We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins. 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 UK without Amazon-imposed restrictions come January 2022. “

A statement from Amazon suggested that ‘the cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers’ and claimed that ‘These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise’.

The BBC cited an Amazon spokesperson as saying that the dispute was to do with ‘pretty egregious’ price rises from Visa over a number of years. Neither side as yet has publicly aired the figures in dispute. Amazon has not said how much Visa is charging to process transactions. Visa has also made no comment about its charges but has said that it takes an average of less than 0.1% of the purchase value of transactions.

Luke Massie, CEO of VibePay, said: “At a time when consumers are already facing significant financial pressures, the battle between Amazon and Visa will have an immediate impact on their choices.

“However, this dispute will bring the payments industry one step closer to card disintermediation, resulting in long-term benefits for the consumer. Rather than the likes of Visa having a monopoly on the payments industry, these battles, which we expect to see more of in the future, will open the door for FinTechs who are taking advantage of technologies such as Open Banking and account-to-account payments. We will then see consumers have more choice than ever before.”