Amazon and Visa, Will they? Won’t they?

Amazon has now announced that it will not stop accepting Visa credit cards for UK payments later this week as was promised in November 2021. This comes as both companies report to be actively searching for a potential solution with Amazon – in an email to its customers – saying that it has been ‘working closely with Visa on a potential solution’. 

Post-Brexit Visa (alongside other card networks) are raising their interchange fees for cards buying goods in Europe from 0.3% to 1.5% and this is where the root of the disagreement lies. The change has no impact on UK merchants yet because Amazon’s European Headquarters are located in Luxembourg, the increase will lead to around a £250m rise in annual fees, making it a bit more understandable as to why Amazon are not best pleased. However, with this said Amazon and Visa both claim their dispute had nothing to do with the UK leaving the EU. 

Amazon’s initial threat was one which would not leave themselves unscathed as it has since been estimated that Amazon would face losing nearly £1.4b from UK shoppers had Visa credit cards been banned from the site, making the £250m rise in annual fees look a lot more appetising than first thought. Yet Amazon would not have been the only ones in this deal set to lose significantly as losing the rights to be used for payments on a retail platform the size of Amazon would be a massive hit as customers would be forced into using other cards.

The banning of Visa Credit cards is something that neither Amazon nor Visa want and so we are left in a situation where both companies are waiting for the other to blink. Both Visa’s statement and Amazon’s customer email coming in the 11th hour to state that ‘Amazon customers can continue to use Visa cards on Amazon.co.uk after 19th January while we work closely together to reach an agreement’ corroborates the idea that both want to reach an agreement and the lack of a specific date further vindicates that whilst both want an outcome other than the banning of Visa Credit Cards, neither wants to be the first to blink in the corporate staring contest they have engaged in.