Amazon to stop accepting payments made with UK-issued Visa credit cards in January
Earlier this week, Amazon announced that it plans to stop accepting payments made with UK-issued Visa credit cards in January 2022. Payments on cards attract a range of fees including interchange fees and other transaction charges, and it is understood that Amazon’s move has not been prompted by an increase in any of the charges in particular. Business Leader spoke to some industry experts to see what it means for the UK.
Regarding the decision, an Amazon spokesperson stated: “The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should be going down over time, with technological advancements, but, instead, they continue to stay high or even rise.”
In response, the British Retail Consortium said: “Retailers in the UK and the EEA now face an estimated £150 million a year cost increase to accept cross-border card payments, with British retailers alone shouldering an extra £36.5 million, or £100,000 every day. The research by retail payments advisory firm CMSPI, in conjunction with the British Retail Consortium (BRC) and its members, revealed the huge impact of fee changes, which have risen up to 475% in some cases.”
Neil Debenham is an entrepreneur, investor and business trouble shooter who has facilitated over £50m worth of private equity and debt investment into scaling UK businesses. He shares his thoughts on what the new announcement is likely to mean for Amazon and the future of the retail sector.
He comments: “As consumer demands and expectations continue to drive down the cost of goods, a balance must be struck between stock and operational and transactional costs.
“To be competitive, a company must offer goods at a price which attracts the consumer. Yet behind every transaction are hidden costs for the retailer that come with processing an order. Some of these hidden costs are linked to the way in which customers choose to pay. To the retailer, these hidden payment costs can feel excessive, particularly when operating on low margins. They can, in fact, make it harder for retailers to offer a great product at a competitive price.
“Amazon’s decision to stop accepting payments made through Visa credit cards will have been a well thought out and calculated move. Given the size of the company, Visa will certainly feel the pain due to a loss of business through the retail giant. Ultimately, Amazon’s move will force Visa to sit back and take note of its excessive fees and make adjustments for the future.
“This trend is becoming increasingly common. More and more companies, including high street banks, are reviewing the impact the card issuer has on their bottom line. With Santander recently making the switch on business accounts from Visa to MasterCard, it’s important to understand that businesses remain focussed on the bottom line and high transactional volume can and will be impacted.”
In response to Amazon’s decision to stop accepting payments from a UK-issued Visa credit card, Shachar Bialick, Founder and CEO of Curve, a financial super-app shared their thoughts.
Bialick comments: “Amazon’s decision to stop accepting payments using UK-issued Visa credit cards will harm a huge number of customers. Consumers without a Financial super-app are losing choice and flexibility when it comes to their finances. Curve is the only solution in the UK that can offset this decision by Amazon. Users will still be able to use their Visa Credit via Curve to shop at Amazon while continuing to earn their Bank’s rewards.”