Amazon steps back from banning Visa credit card payments: industry response

Image: Shutterstock

Image: Shutterstock

Amazon has stepped back from taking away the option to pay using a Visa credit card on Wednesday, as previously announced. The news comes just two days before the step would have come into place.

The retailer and marketplace, which is ranked Elite in RXUK Top500 research, seems to be leaving open the possibility that the change could still happen. In a statement today it says: “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.”

When the change was first announced Amazon said that it was because of the “high fees Visa charges for processing credit card transactions”. The change only appeared to affect Amazon’s UK website, at a time when the cost transactions has been increasing in the EEA as well as the UK. At the time, the BRC had warned that the rising cost of accepting credit card payments would mean British merchants would pay an extra £100,000 a day to process cross-border transactions.

At the time, Visa warned that the decision risked limited customer choice.

Industry response

So why has Amazon now decided against the move? Commentators agree that it’s not a surprise.

Ryan Cook, UK managing director at commerce media platform Criteo, says Amazon risked missing out on business as its customers went elsewhere to buy. “While cutting Visa transactions would certainly have been disruptive for millions, there was no proof this would ‘restrict consumer choice’,” says Cook. “Interfering with payments options would push consumers to explore other ecommerce options before Amazon is able to fully centralise the ecommerce world. With Visa still accepted and their account details saved as a payment method across several other online retailers, consumers would likely revert to familiar alternatives.

“In previous years this might only have amounted to a short deviance but it’s important to remember how far brands and retailers have come in the last two years, with thousands of businesses improving their online experience and striking new delivery partnerships to meet consumer expectations. Given the potential for Amazon to develop its own financial services ecosystem, retailers must make the most of any influx in customer demand to build loyalty. Keeping the competitiveness of the sector alive relies on proving to consumers they can also get consistency and convenience outside of the biggest online retail names.”

David Ritter, financial services strategist at digital consultancy CI&T, says: “That Amazon has halted its ban on UK-issued Visa credit cards comes as no surprise. Amazon is a retail giant so it has some leverage, but there’s no way it won’t accept Visa cards. Cards issued by Visa and Mastercard are ubiquitous and many of these cards also sit behind digital wallets like Apple Pay and PayPal.

“Plus, Amazon has automatic subscriptions tied to Visa cards – most importantly its Prime subscriptions – that consumers would have to change. At the end of the day, the consumer wants to use their preferred payment method.”

But open banking specialist TrueLayer says the issue remains relevant for the retail industry as a whole.

Roger De’Ath, head of ecommerce at TrueLayer, says: “While the news brings temporary relief for Amazon customers, the issue has highlighted a fundamental need for new solutions that benefit every retailer rather than acting as a short-term sticking plaster for the few. For too long, cards have been retrofitted into online checkouts, creating an invisible web of hidden costs and unwieldy payment structures that affect the cost base of every single retailer. With new technologies available that can move money at a fraction of cost and time, the industry no longer needs to be held hostage to card networks for all transactions.”

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