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Amazon, Visa reach global truce over fees

Thursday 17 February 2022 14:42 CET | News

Amazon has reached an agreement with Visa to accept its credit cards across its network, according to Reuters.

The agreement ends a standoff between the two that threatened to disrupt ecommerce payments and deal a blow to the US-based payments processor. Details of the deal were not disclosed but Visa and other payments cards have faced increased pressure about their fees as more shoppers have turned online during the pandemic. The spat had highlighted the growing clout of retailers in the fee battle.  

Amazon had said in November 2021 that it was considering dropping Visa as a partner on its US co-branded credit card, after earlier confirming it would stop accepting Visa credit cards in the UK because of high transaction fees. The recently announced agreement announced means Amazon customers can continue using Visa credit cards in its stores, the ecommerce group said in a statement.

Neither side said what fees would be levied in future - an issue which came to the fore particularly in Britain after an EU-enforced cap on card fees is no longer in place following Brexit.

The dispute between Amazon and Visa in the UK was seen as a bad sign for the card industry by some analysts, who argued it could presage a fight in the much bigger US market. British lawmakers said in January 2022 they planned to scrutinise increases in the fees Visa and Mastercard charge businesses after the country's payments regulator found no evidence to justify the rises.  

In October 2021, Visa began charging 1.5% of transaction value for credit card payments made online or over the phone between the UK and EU, and 1.15% for debit card transactions, up from 0.3% and 0.2%, respectively.

Average credit card processing fees across the industry range between 1.5% and 3.5%, according to analysts.

Retailers have in the past accepted credit card processing charges as an inevitable cost, but that could be changing because of innovations and increased consumer choice in the payments sector.

Credit cards accounted for a third of North American ecommerce spending in 2020, according to WorldPay, but mobile payment options like Venmo and Buy Now, Pay Later (BNPL) financing plans are gaining ground. While alternative payments have been growing for years, the pandemic accelerated a downward trend in credit card applications and boosted the popularity of BNPL financing.

Credit cards' share of North American ecommerce spending declined 7% in 2021, according to WorldPay, while BNPL's share increased 78%.

Other big retailers have in the past settled fee disputes with Visa after announcing they were going to quit taking Visa credit cards in narrow segments of their businesses. Walmart unit in Canada, for example, said in 2016 it would stop accepting Visa credit cards after being unable to reach an agreement on fees. Seven months later the companies said they had settled the matter.

Visa said it was pleased to have reached a broad, global agreement with Amazon, Reuters concludes.


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Keywords: Visa, Amazon, ecommerce, online payments, mobile payments
Categories: Payments & Commerce
Companies:
Countries: United Kingdom, World
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Payments & Commerce






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