Amazon has paused plans for the halting of acceptance of Visa credit card payments, which was set to be implemented on 19 January.
According to a report by the Independent, the tech and eCommerce superpower has shelved the plans, which originally came about due to ‘overly high’ charges, which were a result of Britain departing from the EU.
In spite of stating that ‘advanced notice’ would be given, Amazon hasn’t ruled out implementing a similar regulatory adjustment in the future, with the move only currently being described as postponed.
Neil Smith, Head of Strategic Partnerships EMEA & APAC, Forter, stated on the decision: “Amazon UK’s update today to its customers, explaining that the ban on UK-issued Visa credit cards being used on its platform from 19 January will no longer take place on that date, will come as a relief for those customers who do not want to be inconvenienced by having to switch to alternative payment methods. However, the announcement was hardly surprising; there has been plenty of speculation in recent days on who would back down first.
“The email from Amazon, stating that ‘we are working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards…’ could signal a degree of compromise from both companies, with a 2021 survey indicating a potential loss of £1.4bn for the eCommerce giant. However, given Amazon’s UK market share, it’s likely that Visa has agreed to negotiate on the fees it charges for credit card transactions – and may even have agreed to follow MasterCard’s position.
“Even a significant reduction in Visa’s processing fees would be worthwhile in order to avoid the substantial loss of volume that access to Amazon’s eCommerce marketplace offers.”
He added: “From a security perspective, this U-turn is beneficial for existing Amazon UK customers with a Visa-issued credit card, who can benefit from industry-leading secure customer authentication. Without the ability to use PayPal at the point-of-checkout on Amazon (consumers can go through a long and tedious process to do so, such as using PayPal funds to purchase gift cards), consumers may be tempted to look at alternative methods that do not have as-stringent security verification in place.
“As far as Visa is concerned, if they have agreed to negotiate, they will feel the impact from the loss of processing fees from Amazon UK, and this may also set a precedent when negotiating with other retailers.”
Roger De’Ath, Head of UK at TrueLayer also commented on the decision: “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.”