Saturday , August 13, 2022

Amazon Comes to Terms With Visa After Dropping Its Threat to Ban Visa Cards in the U.K.

With a crucial card-acceptance market at stake, Amazon.com Inc. has reportedly struck a deal with Visa Inc. to continue taking Visa cards issued in the United Kingdom.

The agreement comes nearly a month after Amazon dropped a threat to stop taking the cards and said it would negotiate with Visa. That reversal came at the 11th hour before a deadline the massive online merchant had set in November, when it complained acceptance costs were too high.

Details about the new acceptance agreement were not immediately available. A spokesperson at Visa did not immediately respond to inquiries from Digital Transactions News. Amazon released this statement: “We’ve 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.”

Part of the deal, according to Amazon, includes an agreement on its part to stop charging a surcharge on Visa cards used by customers in Australia and New Zealand.

Observers doubt much detail will emerge regarding the agreement, particularly if Visa yielded any ground. “If there were concessions, Visa wouldn’t want them to be public as it would encourage other retailers to seek concessions,” notes Eric Grover, principal at the consulting firm Intrepid Ventures.

Lawmakers in Britain had said in January that they intended to investigate acceptance fees for both Mastercard and Visa transactions following a report by the country’s payments regulator that there was no basis for rate increases, according to reports by Reuters. The European Union caps card-acceptance fees, but this regulation has not applied in the U.K. since Brexit.

The average fee to U.K. merchants for Visa transactions is 0.55%, compared to 2.22% in the U.S. market, according to the consulting firm CMSPi. That rate yielded fees totaling $369 million in the U.K. market in 2020, according to the firm, which converted the total from British pounds at the then-current rate. The yield in the U.S. came to $43.5 billion.

In October, Visa raised it rate for credit card transactions online or on the phone between the U.K. and the E.U. from 0.3% to 1.5%, according to a Reuters report. The rate for debit card payments between the two jurisdictions rose at the same time from 0.2% to 1.15%, the news service reported.

While Amazon may have reached an agreement to continue accepting Visa cards in the U.K., fee disputes between big merchants and the card networks have erupted periodically in recent years. Walmart, for example, in the summer of 2016 boycotted Visa card transactions in some Canadian stores to protest acceptance costs. The two corporate titans came to terms in January 2017.

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