Amazon To Stop Accepting Visa: What The Experts Say. Image credit: AdobeStock
With Visa increasing transaction rates as a result of the EU cap no longer applying post-Brexit, Amazon are taking a stand to either negotiate fees or simply to remove in order to ensure they are still able to provide the best prices for customers. Despite both parties suggesting the change in fees has nothing to do with Brexit, the cross-border transaction fee (the interchange fee) have increased from both Visa and its rival Mastercard.
According to MoneySavingExpert, an Amazon Spokesperson 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.”
With OpenBanking and shifting dynamics such as ‘Buy Now, Pay Later’ schemes, customers are able to be offered a range of other payment methods which reduces the reliance on methods associated with high fees.
Peter Kimpton Financial expert and Chief Operating Officer at Familymoney.co.uk said:
“Due to the Visa’s high credit card transaction fees, it’s no wonder Amazon is stopping their use on site. Although a market leader, Amazon needs to be able to remain competitive with their many online competitors, as well as small businesses that people are trying to support more and more, especially after the pandemic.
With this in mind, they need to be able to charge the lowest prices possible and still make profit, so it makes sense that the first thing to try and make cuts on is transaction fees.
Visa have responded by criticising Amazon for restricting consumer choice, however I don’t feel this will be a problem, with many consumers opting to have more than one credit card as well as multiple debit cards. I predict Amazon will see no decrease in sales due to this change, and we might even see other large retailers following suit.”
In order to help make the transition even smoother, Amazon offered £20 to Prime Customers to switch from Visa to an alternative payment method and £10 to their non-Prime customers who have a Visa card as their default payment method on the account. It is expected that there may be a compromise reached between the two parties prior to the 19th January deadline and as a result, there may not be a removal of the Visa card at all from the marketplace.
While the most appropriate alternative for many may be to switch back to debit cards, credit cards do offer extra protection as a result of Section 75 of the Consumer Credit Act. Some experts, such as Katie Brain, banking expert at Defaqto, believe that this change actually ‘limits their choice of payment types’.
With just a few weeks left to go until the January 19th deadline, it will be interesting to see what happens between the two global market players in the build up.