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Visa is reportedly discussing with Amazon the possibilities to find a way for UK customers to use their credit cards.
Amazon (NASDAQ: AMZN) has decided to stop accepting Visa Inc (NYSE: V) credit cards issued in the UK. The online retail company stated the new development in an email sent to its UK customers. Beginning from the 19th of January, 2020, Amazon UK customers will no longer be able to use their Visa credit cards for purchases and payments. As such, buyers will need to switch to using Visa debit cards or credit cards issued by other financial services companies like Mastercard Inc (NYSE: MA).
Amazon and Visa Credit Cards Issued in the UK
Interchange fees, also known as swipe fees, are required by merchants to pay on every credit or debit card transaction. This fee payable by Amazon is believed to have taken a five-fold hike since Brexit. This hike would erode profit margins and raise prices not just for Amazon but other merchants on its platform.
Additionally, retail companies across Europe are shouldering an increased £150 million in card fees, some rising by almost 500%. Speaking on the cost challenges the company is facing, an Amazon spokesperson explained:
“This 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.”
In recent months, the online retail company has imposed charges on Visa credit card users in countries like Australia and Singapore, where there is a 0.5% surcharge.
Visa’s Reaction to Amazon’s Announcement on UK-Issued Credit Cards
Visa has expressed its disappointment on the threatening decision by Amazon to stop UK consumers from using its credit cards. A Visa spokesperson stated that “when consumer choice is limited, nobody wins.”
Moving forward, Visa is reportedly discussing with Amazon the possibilities to find a way for UK customers to use their credit cards. In the meantime, UK shoppers can still enjoy this method of payment through the festive periods.
This decision by Amazon has taken its toll on the payment firm as its shares went down by nearly 5%. As a reaction to the news, the stock was trading at around $205.
The senior personal financial editor at money.co.uk, James Andrews, said that Amazon’s decision will come as a blow to billions of Britons using them.
Card fees have been a long-standing issue between retailers and providers. However, the Amazon’s decision appears to be a power move to let Visa lower its card fees. They might just get lucky. While hoping both companies work out their differences, James continued, “it would be advisable to check your cards now.”