Blamed for the “high cost of payments,” Amazon.com said from next year that it would no longer accept Visa credit cards issued in the UK
“The cost of accepting card payments remains an obstacle for companies striving to deliver the best prices to customers. These costs should decrease over time with technological advances, but instead they continue to remain high or even increase,” said one Amazon AMZN,
spokesman in an email statement Wednesday.
“As a result of Visa V,
“Due to continued high payment costs, we regret that Amazon.co.uk will no longer accept UK-issued Visa credit cards from 19 January 2022,” the spokesman said. The e-commerce giant will accept debit cards, including those from Visa, along with other cards not issued by the credit giant.
“With the rapidly changing payment landscape around the world, we will continue to innovate on behalf of customers to add and promote faster, cheaper and more inclusive payment options to our stores across the globe,” Amazon said.
In a separate statement, a Visa spokesman said the company was “very disappointed that Amazon is threatening to restrict consumer choices in the future.
“When consumer choice is limited, no one wins. We have a long-standing relationship with Amazon and we continue to work towards a solution so that our cardholders can use their preferred Visa credit card at Amazon UK without Amazon-imposed restrictions in January 2022, “the spokesman said in an email.
Separately, a Visa spokeswoman said the company’s fees remain “competitive”.
Visa shares fell more than 5% in morning trading on Wednesday.
Baird analyst David Koning called Amazon’s move a “mood bump” for Visa, though he does not think it will have a “significant” impact on the payment company’s finances.
“We think the UK in total might be around 6% of Visa revenue and Amazon a small part of that,” he wrote. “This is more of a risk if it spreads to other traders, but we think unlikely.”
While King expected many Amazon customers to switch to Visa debit cards after a Visa credit card ban, he acknowledged that some might choose credit cards branded by Mastercard Inc. MUST,
or American Express Co. AXP,
Amazon has card partnerships with the other payment giant. Its website shows an Amazon Platinum Mastercard and an Amazon Business American Express card.
This is not the first conflict between a merchant and Visa. Some Kroger Co. chains said they would stop accepting Visa cards in 2018 and 2019 before eventually turning the course.
“For perspective, in recent years, Kroger and Walmart have tried this in North America, which represented larger pockets of Visa’s revenue, even though it was again insignificant,” Koning wrote. “They eventually returned to accept Visa credit cards.”
Barclays analyst Ramsey El-Assal wrote that Amazon’s move “is probably a negotiation tactic.” He also sees a “minimal” financial impact on Visa, as he expects the company’s credit business in the UK to be “dwarfed by the network’s debit business.”