Why Amazon wages war on Visa in the UK
Starting in January, Amazon will no longer accept payments with UK-issued Visa credit cards. Reason? The excessive cost of commissions
A battle between US giants in the UK over payments begins.
Amazon will no longer accept Visa credit card payments on its online commerce platform from UK users.
The Seattle-based e-commerce giant has emailed customers that Visa credit cards issued in the UK will be suspended from use on its site from January 19.
The cause is the " interchange fee ", a tax applied to merchants that goes to the issuing banks every time a customer pays with the plastic card. Amazon attributed this decision to "the high fees Visa charges for processing credit card transactions."
In 2015, an EU law limited interchange fees on credit cards to 0.3%. After Brexit, Visa raised the “trade” share on its transactions between the EU and the UK to 1.5%.
From January next year, customers will still be able to use debit cards, including Visa, and non-Visa credit cards, Amazon said.
“We are very disappointed that Amazon is threatening to limit consumer choice. When consumer choice is limited, no one wins, ”Visa replied.
And the American credit card giant has already suffered from this decision: shares plummeted by more than 3% on the news . For this very reason, Visa added that it is working on a resolution with Amazon.
All the details.
THE AMAZON POSITION
"As a result of Visa's continued high cost of payments, we regret that Amazon.co.uk will no longer accept UK-issued Visa credit cards as of January 19, 2022," an Amazon spokesperson explained.
“The cost of accepting card payments continues to be a barrier for businesses striving to provide the best prices for customers. These costs should decrease over time with technological advances, but instead continue to remain high or even increase, ”he specified.
HOW UK USERS WILL PAY FROM JANUARY 19, 2022
However, as of January 19th, customers will still be able to use Visa debit cards, MasterCard credit cards, American Express credit cards and Visa credit cards issued outside the UK. They can also set up direct debit. Additionally, the company offers some UK customers an incentive of £ 20 ($ 27) to set a debit or non-Visa credit card as their default payment setting.
BECAUSE IT DOESN'T RIGURDA MASTERCARD
However, Visa isn't the only credit card company to have raised transaction fees, recalls The Verge .
“MasterCard increased its interchange fees identically before Visa, but it was not blocked by Amazon. It is not entirely clear why Visa was hit. It could simply be a strategic decision on Amazon's part: targeting a company instead of hitting an entire industry. Or there could be specific complications in Visa's payment policies, ”comments the American site.
THE REACTION OF VISA …
A Visa spokesperson said: “We are very disappointed that Amazon is threatening to limit consumer choice in the future. When consumer choice is limited, no one wins ".
"We have a longstanding relationship with Amazon and continue to work towards a solution, so that our cardholders can use their favorite Visa credit cards on Amazon UK without any restrictions imposed by Amazon starting January 2022," he added. .
… NOT NEW TO THE QUESTION OF COMMISSIONS
In reality, the problem with Amazon is not unique or new. Card fees have long been a point of contention. And Visa has been in the eye of the storm more than once, Quartz recalls.
In 2014, Walmart sued the US unit of Visa for more than $ 5 billion for charging customers who paid by card with "unreasonably high" fees. In June 2016, the retail giant's 370 Canadian stores banned Visa cards due to "unacceptably high" fees for six months.
In 2018, supermarket chain Kroger also stopped accepting Visa credit cards at its subsidiary Foods Co.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/amazon-visa-regno-unito/ on Thu, 18 Nov 2021 14:09:12 +0000.