Yahoo Finance Amazon U-turns on decision to scrap Visa credit cards in UK
Amazon (AMZN) has revealed that the expected change regarding the use of Visa (V) credit cards on its UK site will no longer take place on 19 January.
The online retail giant said it was working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk.
It comes after the company announced in November last year that it will stop accepting payments made by UK issued Visa credit cards due to high fees charged to process transactions.
The move was likely to hit millions of Brits. It was estimated that 89% of UK households shop at Amazon and the company’s subscription service, Amazon Prime, has around 21 million UK subscribers.
Visa debit cards, as well as MasterCard (MA) and Amex (AXP) credit cards, were not set to be affected by the changes. Visa credit cards issued outside of the UK could also be used as normal.
In an email to customers on Monday, Amazon said: “Should we make any changes related to Visa credit cards, we will give you advance notice. Until then, you can continue to use Visa credit cards, debit cards, Mastercard, American Express, and Eurocard as you do today.”
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At the time of the original announcement, Visa said: “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.”
Jenny Ross, Which? Money Editor, said: “Amazon reversing its decision to ban Visa credit cards for now will be good news for many customers, but we would encourage Amazon and Visa to urgently find a long-term resolution to prevent any unnecessary inconvenience or restriction on consumer choice in future.
"There have been long-standing concerns about credit card fees that affect both consumers and businesses, so the regulator should urgently take forward its proposed work examining card fees."
It comes as cross-border transactions between firms in the UK and the European Union have risen since Brexit. Both Visa, and credit card rival Mastercard have hiked fees.
In March last year, it emerged that Visa was planning post-Brexit fee increases for UK customers ordering from the European Economic Area.
Visa increased interchange fees from mid-October, meaning the fees of 0.20% for debit cards and 0.30% for credit cards was upped to 1.15% and 1.50%, respectively.
The interchange rates for business cards is now 1.60%, while corporate and purchasing cards have been revised to 1.80%.
British customers makes tens of billions of pounds of purchases every year from European merchants on credit cards alone.
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“Amazon’s attempt to strong-arm Visa into reducing its transaction fees has failed in spectacular fashion and has left the online retail giant with its tail between its legs. Visa effectively called the bluff, dug its heels in and Amazon was first to flinch." Myron Jobson, personal finance campaigner at Interactive Investor, said.
"Amazon has now taken a more conciliatory tone, claiming to be working with the credit card company on a potential solution."
He added: “Visa's scale means that Amazon had more to lose if it went ahead with the ban. Amazon simply had to weigh up the potential cost of abandoned purchases and the potential loss of traffic to its website because of the ban with the cost of paying Visa’s transaction fees — and the scales tipped in Visa’s favour.
“There may be more twists and turns to come in the saga, but for now, Visa credit card users can continue to flash their plastic on Amazon.”
