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Amazon has halted a plan to ban customers from using UK-issued Visa credit cards from this week as the companies work on a ‘potential solution’ to a rancorous dispute that threatened to severely disrupt businesses. buyers.
The world’s largest online retailer announced the proposed ban in November, citing Visa’s “high fees for processing credit card transactions,” and advised customers to find new payment methods.
However, on Monday, Amazon said “the expected change to the use of Visa credit cards on Amazon.co.uk will no longer take place on January 19.” The group added that it was “working closely with Visa on a potential solution that will allow customers to continue to use their Visa credit cards on Amazon.co.uk”.
Amazon’s ban was widely seen as a bargaining tactic and called “strange” and “unfortunate” by Visa chief executive Al Kelly.
Amazon, whose own grip on consumers has tightened as more people shop online during the pandemic, is working with alternative payment providers to Visa, which alongside Mastercard is a dominant force in payments for decades.
Unlike rivals Mastercard and American Express, Visa does not offer a co-branded Amazon card in the UK. When the ban was first announced, co-branded cards were among the alternatives offered by Amazon to customers.
At the end of 2020, Visa accounted for a third of the UK credit card market, Mastercard 62% and American Express the rest, according to the latest available data from UK Finance, the banking and finance trade association.
“Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely to reach an agreement,” Visa said on Monday.
In the UK, the main banks issuing Visa credit cards are Barclays, HSBC and the Co-operative Bank as well as the building society Nationwide.
Amazon’s intervention in November came after payments companies evaded a European cap on cross-border interchange fees – a levy that credit card companies charge on behalf of issuing banks – when the UK Uni left the block.
Last October, Visa began charging 1.5% of the transaction value for credit card payments made online or over the phone between the UK and EU, and 1.15% for by debit card, compared to 0.3% and 0.2% respectively.
Amazon said in November that Brexit was not the specific cause of the dispute with Visa, instead blaming the US company’s long-term charges.
Amazon has looked at several alternative payment methods beyond traditional credit cards. Last August, it announced a “buy now, pay later” option for US customers through third-party provider Affirm. In December, Barclays and Amazon unveiled a BNPL option called Installments for purchases over £100.
The surge in online shopping during the coronavirus crisis has helped forge an opening for alternative payment providers and has seen investors rush to support them. British payments group Checkout.com secured a valuation of $40 billion last week, while its US competitor Stripe was valued at $95 billion last March.
“For too long, cards have been modernized in online checkouts, creating an invisible web of hidden costs and cumbersome payment structures that affect every retailer’s cost base,” said Roger De’Ath, Chief Commerce Officer. at TrueLayer, which provides a platform for companies to access open banking.
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