Amazon has shelved its plans to stop accepting Visa credit cards and is instead working on a “potential solution” to allow customers to continue using them.
Towards the end of last year, Amazon issued a notice to its customers that it would stop accepting Visa credit cards issued in the UK from 19th January 2022.
The company cited high transaction fees for the reason. Indeed, in October 2021 Visa began charging 1.5% of the transaction value for credit card payments made online or via phone between the UK and the EU, and 1.15% for debit card transactions. This was an increase from 0.3% and 0.2%, respectively.
Although not directly mentioned by Amazon, many blamed the rising fees on Brexit, which saw existing EU-imposed caps on transaction fees no longer apply, enabling Visa to raise them.
However, according to the Financial Times, Amazon said in November that Brexit was not the specific cause of the dispute, and instead blamed Visa’s fees over the long term.
Now, in a notice to its customers just two days before the ban was due to come into effect, Amazon said, “The expected change regarding the use of Visa credit card 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.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the move signified a “truce” between the two giants. “The two sides have not completely backed down but last ditch talks over the weekend appear to have been productive and certainly Amazon is coming across as a lot more conciliatory in tone.”
She added, “Higher fees being charged by Visa remain a bugbear, and it’s likely that a long term solution will be involve some movement here, but it’s not in either companies’ interest for a war of attrition to re-start, with the prospect of significant losses in UK business for either side.”
Martin Lewis, founder of the Money Saving Expert website, journalist, TV and radio presenter, said in a tweet, “I think the Amazon Visa credit card issue was less scaremongering and more a game of giant corporate chicken – to see who blinked first.”
Many other customers who took to twitter seems pleased about the decision, but also somewhat unsurprised.“I suspected Amazon and Visa would sort something out,” one user said.
Others are also pleased to have avoided the inconvenience of changing credit cards or finding another platform to buy from. “Today, the UK consumer can take a small victory,” a pleased consumer tweeted.
However, Streeter said the U-turn leaves consumers in a difficult and confusing position,“Unfortunately, this kind of 11th hour change is no good to people who had been forced to apply for a new Mastercard credit card. If you’ve already applied, it will already show on your credit record. It’s hardly fair that consumers should pay the price for two massive corporations facing off against one another.’’
She advises that for consumers who have already swapped their saved card on Amazon it’s worth thinking carefully whether a credit card is the right option: “If you make specific large purchases and want the extra protection it may well be worth switching back, but if it tends to mean you run up larger credit card debts, now could be a good time for a change.’’
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