Amazon threatened to ban Visa credit cards in the UK
(Picture: Getty Images)Amazon has abandoned plans to ban Visa credit cards on its UK website just days before the policy was due to take effect.
A spokesperson for Amazon said on Monday: “The expectedâ¯change regarding the use of Visa credit cardsâ¯on Amazon.co.uk will no longer take place on January 19.
“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.”
A Visa spokesperson 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.”
Details of the ongoing negotiations or what they might entail were not given.
Amazon said in November it would ban Visa credit cards as payment on its UK site from 19 January, citing “high fees” charged by the company. Visa has increased cross border interchange fees from 0.3% to 1.5% in the UK in the wake of Brexit.
Siamac Rezaiezadeh at GoCardless said: “Businesses are pushing back against the draconian terms and high fees that are levied just for the privilege of taking a payment.”
Amazon’s ban threat echoed similar actions taken by the e-commerce giant in other markets around the world, including Singapore and Australia.
Experts said the public threat was likely a bargaining technique in negotiations over fees with Visa.
David Ritter, financial services strategist at CI&T, said: “It’s more likely that Amazon has been applying pressure tactics. Major players in the retail space tend to have bespoke rates with payment firms, rather than paying published rates. The move by Amazon is likely a way to negotiate a longer-term agreement on rates, or even to push for a freeze to its current rates.”
Some said Amazon could also be seeking to cut card operators out of the payment equation in the long-term, instead plugging directly into consumers’ bank accounts.
Rezaiezadeh said: “Thanks to innovations like open banking, payments can instantly move from one account to another.
“As adoption increases for these digital-first payment options, we expect to see an end to ‘card on file’ and the rise of ‘account on file’ instead.”
Roger De’Ath, head of UK at TrueLayer, said today: “While the news brings temporary relief for Amazon customers, the issue has highlighted a fundamental need for new solutions that benefit every retailer rather than acting as a short-term sticking plaster for the few.
“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.”
Shares in Visa dropped in New York when Amazon first announced plans to the ban. The payment giant was up slightly in the pre-market on Wall Street today.
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