Clash with Visa over payment fees grows, as Amazon explores partnership options on co-branded credit card in the United States
Amazon’s relationship with Visa continues to deteriorate, as the firm reportedly considers dropping the payment giant as a partner on its co-branded credit card in the strategically important market of the United States.
Reuters reported that Amazon is in talks with several payment networks including Mastercard, American Express and Visa, as part of what it called its ‘standard process’ for reviewing its co-branded credit card agreement, a spokesperson was quoted as saying.
According to Reuters, Visa declined to comment on matter, and there was no response either from Mastercard and American Express.
UK Visa payments
But the move comes just days after Amazon announced that from 19 January 2022, it will stop accepting UK Visa credit cards for payments in the United Kingdom.
Amazon 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.”
Reuters reported that Amazon has in recent months introduced surcharges on customers using Visa credit cards in Singapore and Australia, citing high fees as the reason.
But Amazon’s UK ban on Visa cards is reportedly not helped by Britain’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 seems to be doing the same.
According to Reuters last month, Visa began charging 1.5 percent of the transaction value for credit card payments made online or over the phone between the UK and EU, and 1.15 percent for debit card transactions, up from 0.3 percent and 0.2 percent, respectively.
The average credit card processing fees across the industry range between 1.5 percent and 3.5 percent of each transaction, analysts have reportedly said.
Amazon’s game of chicken with Visa could be a simple negotiating tactic, to try and get Visa to lower its payment fees to previous lower levels.
The tactic of banning Visa card payments has worked before for other large retailers, Reuters reported.
For example, Walmart’s unit in Canada in 2016 said it would stop accepting Visa credit cards after it was unable to reach an agreement on fees.
Seven months later the companies reportedly settled the matter, after about 20 stores stopped taking Visa cards.
And it should be noted that Amazon’s UK ban on Visa credit cards may yet be resolved, as talks between the two parties are still ongoing.
“We are very disappointed that Amazon is threatening to restrict consumer choice in the future,” a Visa spokesperson said earlier this week.
“When consumer choice is limited, nobody wins,” the Visa spokesperson said. “We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions come January 2022.”