Amazon backtracks on Visa credit card ban - everything we know so far on huge row

The US-based tech giant said back in November it was going to block all payments using this particular method, but it has made a significant U-Turn. If this ban had gone ahead, all customers who were using Visa credit cards would have had to have found an alternative means of payment. Today, the online shopping platform confirmed it would not ban accepting UK-issued Visa credit cards on its website later this month as it had early said.

In email to customers, Amazon stated: “The expected change regarding the use of Visa credit cards* on Amazon.co.uk *will no longer take place on January 19.

“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 ecommerce giant added: “Should we make any changes related to Visa credit cards, we’ll give you advanced notice.

“Until then, you can continue to use Visa credit cards, debit cards, Mastercard, American Express and Eurocard as you do today.”

In March 2020, it was unveiled that Visa was set to introduce a rise in transaction fees for UK customers ordering from the European Economic Area.

At the time, many cited Visa’s decision as a potential consequence of Brexit with the increase in further trade and financial restrictions.

From October 2021, Visa raised interchange fees by 0.20 percent which resulted in the fees of 0.20 percent for debit cards and 0.30 percent for credit cards going up by 1.15 percent and 1.50 percent, respectively.

Currently, the interchange rates for Visa business cards stand at 1.60 percent and corporate cards have been changed to 1.80 percent.

DON’T MISS:

Average pension pot is £61,897 – so how much retirement income will… [GUIDE]Drawdown disaster – pensioners run out of cash as they make ‘unsustainable’ withdrawals [ANALYSIS]Avoid Sunak’s 55% ‘horror’ pensions tax raid – 4 ways to avoid [EXPERT]

This hike in fees led to the public disagreement between Amazon and Visa which appears to have reached some form of settlement for the time being.

However, Amazon’s latest message to customers did not say that the dispute had been resolved for good with the company emphasising that potential changes will be given “advanced notice”.

Reacting to the news, a Visa spokesman said: “Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely together to reach an agreement.”

On social media, financial experts shared their thoughts on Amazon’s decision to backtrack on their proposed ban on credit card payments.

Mark Di Stefano, Amazon reporter for The Information, said: “Company tells UK customers they’re now working on a solution with Visa.

“Hard ball worked. Who doesn’t love a game of corporate chicken?”

Customers of Amazon also shared their thoughts on Twitter, with one user named Andy writing: “Who blinked first, Amazon or Visa? Whichever, I’m glad it’s not (currently) happening.

“Though if it had done so, I’d have stopped using Amazon rather than switch credit cards or use a debit card which doesn’t have the same online purchase protections.”

Another Twitter user named Peter McLean said: “I see Amazon have scrapped the whole “not taking Visa cards in the UK anymore” thing then.

“I guess Visa rolled over and dropped their fees for Amazon. I wonder if any other businesses will see the same benefit.”

On Twitter, Richard Sutton added: “So Amazon pull the Visa card change days before it was due to be implemented.

“What company uses its customers as a bargaining chip to get their own way? Not good behaviour at all.”

Reacting to the news, Siamac Rezaiezadeh, the Director of Product Marketing at GoCardless, said: “With just a few days to go before Amazon’s ban comes into effect, customers and merchants are waiting anxiously to see who will win in this ‘Goliath v. Goliath’ battle.

“No matter what happens, though, the damage has already been done: retailers everywhere are challenging the duopoly of the card networks with AllSaints, Superdry, and Levi’s just some of the other brands now tackling high fees, this time through legal action.

“It’s not just Amazon’s announcement that has emboldened these merchants. The fact is, businesses — both large organisations who have the market power to fight back and smaller enterprises who were previously trapped — no longer have to rely on cards because so many alternative payment options are now available, and readily embraced by consumers.

“These methods, many of which move money directly from one account to another without the intermediaries that drive up the cost of card transactions, will put an end to ‘card on file’ and give rise to ‘account on file’ instead.”

In her response to the news, Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said: ”A truce has been called in the game of brinksmanship between Amazon and Visa with the e-commerce giant appearing to relent and allow credit card customers to continue shopping on the site.

“The two sides have not completely backed down but last ditch talks over the weekend appear to have been productive and certainly Amazon is coming across as a lot more conciliatory in tone. Higher fees being charged by Visa remain a bugbear, and it’s likely that a long term solution will be involve some movement here, but it’s not in either companies’ interest for a war of attrition to re-start, with the prospect of significant losses in UK business for either side.

“This is a niggling headache Visa will want to see lifted as it grapples with competition from start-ups and more established rivals. But it does still remain the world’s largest payments processor and is still positioned squarely in the centre of the global shift towards cashless payments. With the contactless trend only recently hitting the US in a big wave, there is still plenty of growth potential ahead.”