Amazon has reached an agreement that paves the way for it to continue accepting Visa credit card payments across all of its websites and stores, ending months of uncertainty over credit card fees.
Under the deal, Amazon will no longer levy an additional fee to customers who use Visa Cards onsite in Australia and Singapore. The agreement also eliminates the threat of Amazon blocking Visa credit card payments on its UK store, the company told the Financial Times
Visa said: "This agreement includes the acceptance of Visa at all Amazon stores and sites today, as well as a joint commitment to collaboration on new product and technology initiatives."
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Why did Amazon want to ban Visa credit card payments?
Amazon was due to ban UK visa credit card payments on 19 January this year because of what it says are “high fees… for processing credit transitions.”
Amazon first proposed the ban in November, and offered consumers a £20 Amazon voucher to encourage them to ditch Visa for an alternate form of default payment .
The fuss over Visa’s fees is to do with Britain’s departure from the EU, which meant that cross-border “interchange” fees, which are charged by credit card providers on behalf of the banks that issue them, were no longer capped. The result was that these fees shot up from 0.3% to 1.5%.
Amazon has previously stressed that its spat with Visa is not to do with interchange fees but rather to with Visa’s long-term fees.
But analysts branded Amazon’s threats as pressure tactics to convince Visa to offer co-branded cards, which rivals such as Mastercard and American Express have done. Visa currently does not offer co-branded cards.
“Major players in the retail space tend to have bespoke rates with payment firms, rather than paying published rates. The pressure on Visa was likely a way to negotiate a longer-term agreement on rates, or even to push for a freeze to its current rates,” says David Ritter, financial services strategist at CI&T, an IT and software company.
David Beard, editor-in-chief and personal finance expert of financial comparison site, Lendingexpert.co.uk, said the truce between both giants is a “welcome relief for Amazon customers” as not accepting Visa would have meant customers would be compelled to pay with a debit card or a new Mastercard.
“Paying for items with a debit card means customers wouldn’t have benefited from Visa credit card perks like cheap borrowing if they had a 0% interest period, cashback, rewards and extra protection for purchases over £100,” Beard added.
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