Two days before Amazon threatened to stop accepting UK-issued Visa cards, the two firms have agreed a deal for British online shoppers.
It comes after British consumers were shocked last November when Amazon announced that from 19 January 2022, it will stop accepting UK Visa credit cards for payments in the United Kingdom.
Amazon at the time admitted its decision was “inconvenient” for customers with UK Visa credit cards, but it had taken the decision because of the “high fees Visa charges for processing credit card transactions” on its UK cards.
Amazon said such charges should be “going down over time with technological advancements, but instead they continue to stay high or even rise.”
Amazon has in recent months introduced surcharges on customers using Visa credit cards in Singapore and Australia, citing high fees as the reason.
Days after that Amazon was said to be also considering dropping Visa as a partner on its co-branded credit card in the strategically important market of the United States.
Some blamed the fee increases on the UK’s exit from the European Union.
This is reportedly because the EU enforced a cap on fees charged by card issuers, and this cap is no longer in place, meaning providers are free to increase charges.
In September for example, PayPal announced it was raising its fees for payments between businesses from the European Economic Area to the UK.
And Visa and others now seems to be doing the same.
But this is triggering regulatory concern and scrutiny.
Last week the UK’s Payment Systems Regulator (PSR) told parliament’s Treasury Select Committee that it had not seen evidence as to justify why card payment processors are increasing their fees.
It said that it found no evidence to justify the fee rises, and the PSR said that, if it becomes apparent that there are no real prospects of improving competition in the market, it will be willing to consider additional regulation to protect consumers and businesses from rising prices.
Against this backdrop comes the news that Amazon and Visa have reached an agreement, that will allow Amazon customers to continue using their Visa cards on the website.
The Guardian reported that on Monday morning, Amazon started sending affected customers emails telling them they would be able to continue to use their Visa credit cards to pay for items, and for Amazon Prime.
“The expected change regarding the use of Visa credit cards on Amazon.co.uk will no longer take place on 19 January. We are working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk,” the email reportedly stated.
“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,” it reportedly said.
It should be noted that 90 percent of British people shop at Amazon its analysts have apparently estimated Amazon Prime membership in the UK to be about 21 million.
Last month, it was alleged that Amazon faced losing nearly £1.4bn from UK shoppers had Visa credit cards been banned from the site.
But Visa would have been badly hit as well, losing a huge slice of revenue as customers would have been forced to use other cards.
The Guardian reported that it seems that the crisis talks happened over the weekend and this has borne fruit, and that a holding deal appears to have been put in place.
However this is only a short term agreement, and a longer-term solution is still being thrashed out.
“Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely together to reach an agreement,” a Visa spokesperson was quoted as saying.