Amazon.com Inc. will stop accepting payments made with Visa Inc. credit cards starting next year, the online retailer's latest step in its fight against transaction fees charged by payment processors.
This week, Amazon users were informed of the changes. After making their purchases, they received a notice from the company that from January 19, 2022, “we will no longer accept UK-issued Visa credit cards” due to high transaction processing fees. Shares of Visa fell 5.2% to $203.96 at 9:36 am in New York. They are down 6.6% this year, compared to a 29% gain in the S&P 500 information technology index.
An Amazon spokesperson said that "the cost of accepting card payments continues to be a barrier to businesses looking to provide customers with the best prices."
Customers can still use Visa debit cards as well as MasterCard Inc. credit cards. and American Express Co., as well as non-UK Visa credit cards, the retailer told users, offering them a twenty-pound ($27) discount on their next purchase if they chose a non-Visa debit or credit card as their payment card. by default. In Singapore and Australia, Amazon has already introduced an additional fee for those who use Visa credit cards.
“We are very disappointed that Amazon is limiting consumer choice going forward. When consumer choices are limited, no one wins,” a Visa spokesperson said in an email. "We have a long relationship with Amazon and we continue to work on resolving it."
Card fees have long been a hotspot between merchants, banks and payment networks like Mastercard and Visa.
Retailers have long complained about the amount they spend annually accepting electronic payments, and that figure has risen to over $100 billion a year in the US as fees increase and consumers shift to premium cards with higher variable rates - fees are charged every once the user uses the card.
This issue is becoming more acute in the post-Brexit UK as both Visa and Mastercard scrutinize whether certain fees will increase, the UK is now outside the European Union. A survey this week found that credit and debit card spending is rising by £150m a year, with both UK and European retailers losing out.
The UK's exit from the EU lifted restrictions on transactions between the UK and the European Economic Area, allowing card companies to increase cross-border payment fees, according to consulting firm CMS Payments Intelligence and the British Retail Payments Consortium.
“Card payments accounted for over 80% of UK retail spending in 2020 and just two firms account for 98% of those payments,” said Andrew Cregan, payment policy adviser at the British Retail Consortium, who called for a UK payment system. The regulator will intervene. “Ultimately, if these rising costs cannot be minimized, it will be the end consumers who will be the hardest hit, who will have to buy at higher prices.”
Amazon has tried various methods over the years to limit the amount of fees paid to customers using credit cards. In the past, the retailer has encouraged consumers to use debit cards to add cash to their Amazon accounts and use it for purchases rather than credit cards, and has also made it possible for individuals to link their checking accounts for payments.
Back in 2016, Wal-Mart Stores Inc. filed a lawsuit against the American division of Visa Inc. about the cost of processing payments. In 2018, the supermarket chain Kroger Co. stopped accepting Visa credit cards at its Foods Co. branch. in California. He extended the ban when he stopped accepting network cards at Smith's, another division, before the two sides reached a truce in October 2019.
In the UK, J Sainsbury Plc, Asda and Wm Morrison Supermarkets Plc have won a key UK Supreme Court battle that has helped secure billions of pounds in payments for them.
In the US, Visa and Mastercard have postponed plans to increase the fees US merchants pay when consumers use credit cards online, pushing back changes that were originally supposed to go into effect in April 2020 to April 2022 due to the pandemic.