News and resources on payments systems, innovations and initiatives worldwide.
Amazon reaches global deal with Visa over card fees

Amazon reaches global deal with Visa over card fees

Amazon has dropped its threat to stop accepting Visa cards across its global operations after reaching an agreement with the card scheme.

Amazon last month deferred previously announced plans to stop accepting Visa card payments in the UK due to what it perceived to be punchy charges for processing credit card transactions in post-Brexit Britain.

Those plans have now been dropped completely following Amazon's agreement with Visa. Amazon will also drop a 0.5% surcharge on Visa credit card transactions in Singapore and Australia, which it introduced last year.

Given Amazon's pulling power, it is likely that the online giant has been offered new terms by Visa in relation to scheme charges.

“We’ve recently reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores,” Amazon said in a statement. “Amazon remains committed to offering customers a payment experience that is convenient and offers choice.”

Visa says its agreement with Amazon would see the two collaborate on “new product and technology initiatives to ensure innovative payment experiences for our customers in the future.”

For Siamac Rezaiezadeh, director of product marketing at GoCardless, the agreement reflects the waning ability of the global card schemes to set aggressive payment terms, as consumers move to more 'digital-first' payment methods.

“As this chapter of the Amazon and Visa feud closes, it’s important to keep one eye on the bigger picture: businesses are now pushing back against unfavourable terms, ones they historically had little choice but to accept," he says. "The landscape has now changed dramatically with the rise of BNPL and open banking-enabled payments, both of which are increasingly popular with consumers. This gives businesses a genuine alternative to the card schemes."

Comments: (3)

Gerard Hergenroeder
Gerard Hergenroeder - Payments Shark - Millersvile 17 February, 2022, 14:23Be the first to give this comment the thumbs up 0 likes

Interchange pricing has always been a cash cow for Visa's member banks. It generates $ billions in revenue for cardholder banks. As the industry has reduced processing costs and fraud losses, there is always a tendency to not share lower expenses and fraud losses with merchants. Amazon forced Visa's hand to lower interchange. This is good news to the merchant community. More large merchants should challenge Visa to realize value form the new economics of card processing. Remember efficiencies realized from processing and fraud reduction should always drive reductions in interchange fees.

A Finextra member
A Finextra member 18 February, 2022, 09:03Be the first to give this comment the thumbs up 0 likes

So does this mean things will be cheaper to buy on Amazon now? I very much doubt it, just more profit for Amazon.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 18 February, 2022, 11:15Be the first to give this comment the thumbs up 0 likes

Not that I can see any mention in the article that Visa has reduced Interchange for Amazon but assuming that's the case, let's see if Amazon passes on the reduced fees to consumers by way of discounts. But I won't hold by breath. Merchants have always incurred lower MDR on Debit Card versus Credit Card but I haven't come across a single merchant who gives a discount for shoppers paying with Debit Card compared to Credit Card.


Related News