Amazon to keep accepting Visa cards in the UK after resolving fee dispute

Amazon will continue accepting Visa credit cards in the UK after reaching a deal to end the standoff.

In November, Amazon had confirmed that it would stop accepting Visa credit cards in the UK from 19 January 2022 due to the high fees Visa charged for processing these transactions. 

Now, the companies have reached an agreement.

‘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,’ a Visa spokesperson told Reuters.

Yesterday’s announcement means Amazon customers can continue using Visa credit cards in its stores, the e-commerce group said in a statement.

Neither side said what fees would be levied in future.

Details of the deal were not disclosed but Visa and other payments providers have faced increasing pressure about their fees as more shoppers have turned to online shopping during the pandemic. 

The standoff was mainly due to an EU-enforced cap on card fees no longer applicable in the UK following Brexit.

British lawmakers said last month that they planned to scrutinise increases in the fees Visa and Mastercard charge businesses after the country’s payments regulator found no evidence to justify the rises.

Last October, Visa began charging 1.5% of transaction value for credit card payments made online or over the phone between the UK and EU, and 1.15% for debit card transactions, up from 0.3% and 0.2%, respectively.

Average credit card processing fees across the industry range between 1.5% and 3.5%, according to analysts.

Retailers have in the past accepted credit card processing charges as an inevitable cost, but that could be changing because of innovations and increased consumer choice in the payments sector.

Mobile payment options and ‘buy now, pay later’ (BNPL) financing plans are gaining ground. While alternative payments have been growing for years, the pandemic accelerated a downward trend in credit card applications and boosted the popularity of BNPL financing.

In an email to users of the site in November, Amazon blamed the cost of processing the payments: ‘Starting 19 January 2022, we will unfortunately no longer accept Visa credit cards issued in the UK due to the high fees Visa charges for processing credit card transactions,’

Other big retailers have in the past settled fee disputes with Visa after announcing they were going to quit taking Visa credit cards in narrow segments of their businesses.

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