Amazon To Ban Visa Credit Cards In The UK
On Thursday, Amazon announced it will stop accepting payments using Visa credit cards issued in the UK from January 2022. Visa has said it is “very disappointed” with Amazon’s decision.
The dispute is about the fees charged by Visa, which have recently increased due to Brexit. Interchange fees sit at the centre of this issue. This is a small fee levied by card networks such as Visa on every transaction made using its cards, taken to cover the cost of processing the payment.
Under 2015 EU regulation, interchange fees were capped in the bloc of 0.2% for debit card transactions and 0.3% for credit cards. At the time of introduction, the EU said that the regulation would save consumers approximately $6 billion in hidden fees. However, post-Brexit, operators in the UK are no longer bound by these rules.
According to the Financial Times, Visa planned to up its cross border interchange fees from 0.3% to 1.5% this year. Such fees, to be paid either by Amazon directly or by sellers on its platform, would erode profit margins and lead to more costly products if passed on.
A spokesperson for Amazon said, "The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should be going down over time with technological advancements, but instead, they continue to stay high or even rise.
"As a result of Visa's continued high cost of payments, we regret that Amazon.co.uk will no longer accept UK-issued Visa credit cards as of 19 January, 2022."
The online retailer also advised its customers to update their default payment.