December 7, 2022

Blog @ Munaf Sheikh

Latest news from tech-feeds around the world.

Amazon rows back on threat to stop accepting UK-issued Visa cards – TechCrunch


Amazon appears to have rowed back from a public threat to end support for Visa payments in the UK in a dispute over payment fees.

The ecommerce giant sent an email to users of Amazon.co.uk today informing them that the “expected change” — which was due to take place on January 19 — will not now take place on that day.

Although it is still not clear if the two companies have come to sustained terms on fees.

“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,” Amazon writes in the email sent to UK users.

“Should we make any changes related to Visa credit cards, we will give you advance notice,” it goes on, adding: “Until then, you can continue to use Visa credit cards, debit cards, Mastercard, American Express, and Eurocard as you do today.”

Reached for comment, Amazon and Visa confirmed the development — but did not offer any further detail.

Amazon declined to provide any comment beyond its brief statement to users that nothing is changing for now.

While a Visa spokesperson also did not elaborate on what “potential solutions” might mean in practice — implying that negotiations on fees are ongoing in a statement in which it writes: “Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely together to reach an agreement.”

In an earlier email to UK users, late last year, Amazon had blamed high payment fees charged by Visa for credit card transactions for ending support for Visa payments — warning Brits to make alternative arrangements for paying for their purchases on Amazon.co.uk.

Its very public mass email had looked like an attempt to leverage its market power to extract better terms from Visa.

Whether that worked to convince Visa to reduce its credit card fees or whether Amazon has just decided to step back from the brink of causing major disruption to UK shoppers is unclear.

If the latter, Amazon had already caused UK users who rely on Visa-based payment methods months of uncertainty over whether they would be able to continue making purchases on its site in the near future.

Back in November, Visa described it as disappointing that Amazon “is threatening to restrict consumer choice in the future”, as it put it then, also arguing “when consumer choice is limited, nobody wins”.

At the time, Visa had said it was working towards a resolution with Amazon to ensure Visa cardholders can keep on using their UK-issued Visa credit cards on its website.

Months later talks apparently continue — just without a looming public deadline for Amazon to stop accepting UK-issued Visa cards.

Rising fees for Visa transactions on Amazon.co.uk have been linked to the UK’s departure from the European Union — as Brexit removed the cap on fees that can be charged on transactions between the UK and the European Economic Area/EU.

But the issue also likely involves the specifics of how Amazon structures its UK business — since it bills UK customers via an EU-based entity, shifting revenue booked via its UK website to its European HQ in Luxembourg.

A report covered by City AM last August suggested this corporate structure has enabled Amazon to evade paying considerably higher sums in UK tax. However it looks like the same ‘profits shifting’ structure costs (or, well, has costed… ) Amazon considerably more in Visa ‘taxes’ than it would like to pay.



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