An earlier decision to ban the use of Visa credit cards issued in the UK has been reversed by Amazon yesterday (17 January), temporarily calling a truce on an ongoing corporate battle between the two retail industry giants.
In November, Amazon told customers that it would stop accepting UK-issued Visa credit cards for payments on its online shopping website from 19 January because of “high fees” charged by Visa for processing credit card transactions.
In an email to affected customers yesterday, Amazon said that it was “working closely with Visa on a potential solution” that will let customers continue to pay with their Visa credit cards on Amazon’s UK website. It added that it would give customers “advance notice” in case the talks fell through.
“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,” the email read.
Based on a poll of 2,000 Amazon customers in December, it was estimated that Amazon faced losing nearly £1.4bn as a result of the Visa credit card ban, with many users either reducing their purchase amounts, or entirely halting their purchases, according to The Independent UK.
Despite Amazon’s high potential losses, some of which may have already occurred, Visa stands to lose out in this corporate standoff too. Because Amazon reversed its decision in the 11th hour, many Visa credit card customers may have already switched to other payment methods, such as Mastercard – an Amazon partner.
Amazon has made similar moves to curb the use of Visa-issued credit cards in Singapore and Australia, where it has introduced a 0.5pc surcharge on transactions made with those cards. In lieu of the inconvenience, Amazon offered customers gift cards to incentivise switching payment methods.
Ever since Brexit, both Visa and Mastercard have raised their “intercharge fees” on cross-border transactions between the UK and the EU, according to BBC News. This is because the UK is no longer subject to an EU cap on fees charged by card issuers to increase competition in the space dominated by Visa and Mastercard.
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