Ecommerce giant Amazon has said that beginning on January 19 of next year, it won’t accept British-issued Visa credit cards. Amazon said the reason was “due to the high fees Visa charges for processing credit card transactions.”
Once news broke of the change, Visa’s share prices fell by 2.5 percent during premarket trading on Wednesday.
Visa reacted by saying that it was “disappointed that Amazon is threatening to restrict consumer choice in the future.”
Early in 2021, Visa raised its interchange fees, which are what it charges merchants to process digital transactions between the European Union and the U.K.
Once the U.K. withdrew from the EU during Brexit in January 2020, an interchange fee cap no longer applied for the U.K., allowing credit card networks and issuers to increase their prices.
Visa isn’t the only card issuer to raise its fees. Mastercard increased its interchange fees as well.
Amazon’s customers will still be able to use Visa-issued debit cards as well as non-Visa credit cards such as American Express and Mastercard. Amazon’s users are being asked to make changes to their default payment if necessary before the January changes take place.
A Visa spokesperson added, “U.K. shoppers can use their Visa debit and credit cards at Amazon U.K. today and throughout the holiday season. 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 U.K. without Amazon-imposed restrictions come January 2022.”
But, Amazon is still criticizing Visa for the excessive charges on credit cards. 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.”
Some believe the move by Amazon could be a bargaining chip to get Visa to lower its fees. Visa also charges merchants what is known as scheme fees to be part of the Visa network. But most of these merchandisers are smaller retailers who aren’t in a fair position to negotiate.