Amazon.com Inc is considering ditching Visa as a partner on its co-branded credit card in the United States after confirming earlier that it would stop accepting Visa credit cards in the United Kingdom as the dispute over them payments intensified.
The e-commerce giant is in talks with several payment networks, including Mastercard Inc, American Express Co and Visa, in what it called its standard process to review its co-branded credit card agreement, said a spokesperson.
Visa declined to comment on the co-branded card. Mastercard and American Express did not respond to requests for comment.
Earlier, Visa shares closed 4.7% lower after Amazon said it would stop accepting Visa credit card payments in the UK from January 19, 2022. In a statement , he said these fees are expected to “decrease over time with advancements in technology, but instead they continue to stay high or even increase.”
In recent months, Amazon has introduced additional fees for customers using Visa credit cards in Singapore and Australia, citing high fees, as relations between the two companies deteriorate.
Since Britain’s exit from the European Union, an EU cap on fees charged by card issuers is no longer in place in the UK, meaning providers are free to ” increase costs.
Last month, Visa started charging 1.5% of the transaction value for credit card payments made online or over the phone between the UK and the EU, and 1.15% for transactions by debit card, compared to 0.3% and 0.2% respectively.
Industry-wide average credit card processing fees range from 1.5% to 3.5% of each transaction, analysts say.
Historically, retailers have accepted processing fees from major credit card companies as the cost of accessing their vast network of card users, analysts said, but that could change.
The move marks an “important turning point in the payments industry,” said Laura Hoy, equity analyst at Hargreaves Lansdown, adding that Amazon may hope to attract more customers to its own payments system.
âAt the end of the day, we think Amazon has the edge in this chicken game – whether customers embrace its own payment system or Visa gives in and lowers its fees, either is a win for. the retail giant, âHoy said.
In the past, other large retailers settled fee disputes with Visa after announcing they would stop accepting Visa credit cards in narrow segments of their business.
Walmart Inc’s unit in Canada, for example, said in 2016 it would stop accepting Visa credit cards after being unable to come to an agreement on fees. Seven months later, the companies said they settled the case after around 20 stores stopped accepting Visa cards.
Amazon customers can still use Visa debit cards, Mastercard and Amex and Eurocard credit cards in the UK, Amazon said in a note to customers.
Visa said in a statement it was “disappointed that Amazon is threatening to restrict consumer choice.”
“We are continuing to work on a resolution, so that our cardholders can use their preferred Visa credit cards on Amazon UK without restrictions imposed by Amazon from January 2022,” Visa added.
The British Retail Consortium said other retailers in the UK were facing higher fees for cross-border payments, following Britain’s departure from the European Union.