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After several requests for Visa to reduce process fees, Amazon retailers were already swaying. The partnership between Amazon and Visa will encourage more collaboration beyond credit card acceptance.
Amazon.com Inc (NASDAQ: AMZN) has entered into a partnership agreement with Visa Inc (NYSE: V) to accept Visa credit cards. Following the deal, Amazon will continue to allow Visa credit cards on its website across the world. The world’s largest retail outlet, which strives for operational excellence, threatened to stop accepting Visa credit cards in the UK. Amazon wanted to take the step due to high charges to process fees. Amazon customers in Singapore and Australia were overcharged when they used Visa credit cards on the Amazon website. Moving forward, the retail company will drop a 0.5% surcharge on transactions that occur across Singapore and Australia using the Visa credit card.
For a while, Amazon had been planning to ban payments that involve the use of Visa credit cards in the UK. This was after Visa began to charge 1.5% of the value of the transaction for credit card payments made online between the UK and the EU. Also, Visa stated that Amazon was restricting customer choice. The rise in charges has gained the attention of the Payment Systems Regulator. Last year, the authority reviewed card fees and concluded that they have “increased significantly in recent months.”
Notably, the issues between Amazon and Visa did not affect the payment company debit cards. Although Visa and Mastercard Inc (NYSE: MA) increased the cost of processing debit card payments from 0.2% to 1.15%.
Amazon Agrees to Accept Visa Credit Cards
An Amazon representative spoke about the recent agreement between Amazon and Visa. The spokesperson said in an email:
“We have recently reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores.” Amazon remains committed to offering customers a payment experience that is convenient and offers choice.”
Visa, on the other hand, said that “this agreement includes the acceptance of Visa at all Amazon stores insights today, as well as a joint commitment to the collaboration on new product and technology initiatives to ensure innovative payment experiences for our customers in future.”
After several requests for Visa to reduce process fees, Amazon retailers were already swaying. The partnership between Amazon and Visa will encourage more collaboration beyond credit card acceptance. It also allows for new product and technology initiatives between both companies. Additionally, customers and retailers will have better experiences shopping on Amazon. The terms of the agreement between the two companies are currently are unknown to the public.
Mastercard and American Express (NYSE: AXP) now face intense competition from a flood of fintech challengers.
At the time of writing, Amazon is up 0.38% to $3,174.01at pre-market trading. Except for gaining 4.24% over the past month, AMZN has been recording losses.
On the other hand, Visa has been pulling in gains. The company has advanced over 10% in a year. Apart from losing less than 1% in the last five days, Visa has added 5.59% in its year-to-date record.