Amazon halts plan to cease accepting Visa bank cards within the UK

LONDON — Amazon has scrapped plans to cease accepting Visa bank cards within the U.Okay.

The e-commerce big was expected to prevent Brits from using a Visa-issued credit card on its platform from Jan. 19. However in an announcement Monday, the agency mentioned the change “will not happen.”

“We’re working intently with Visa on a possible resolution that can allow clients to proceed utilizing their Visa bank cards on Amazon.co.uk,” an Amazon spokesperson informed CNBC by e-mail.

Amazon initially made the shock announcement in November, citing “excessive charges Visa prices for processing bank card transactions.” Visa on the time mentioned it was “very upset” within the transfer and would work towards a decision with Amazon.

The 2 firms have locked horns up to now, with Amazon saying plans to introduce a 0.5% surcharge on Visa bank cards in Australia and Singapore final 12 months.

It is not but clear why Amazon made the U-turn on its plan to ditch Visa bank cards within the U.Okay., nor whether or not the choice is remaining or momentary.

“Amazon clients can proceed to make use of Visa playing cards on Amazon.co.uk after January 19 whereas we work intently collectively to achieve an settlement,” a Visa spokesperson informed CNBC by e-mail.

Following Brexit, Visa and rival fee processor Mastercard have hiked interchange charges, the minimize they tackle digital transactions between the U.Okay. and European Union. Card networks had been allowed to lift their prices after an EU cap on interchange charges ceased to use in Britain.

Nevertheless, Amazon and Visa say the dispute will not be associated to the U.Okay.’s withdrawal from the EU. As an alternative, the transfer was interpreted by consultants as a means for Amazon to get some bargaining energy over Visa to decrease its charges.

David Ritter, a monetary companies strategist at IT agency CI&T, mentioned the about-face from Amazon “comes as no shock.” He argues the transfer would have confirmed troublesome on condition that clients’ Visa bank cards could also be tied to digital wallets like Apple Pay, Google Pay and PayPal, in addition to Amazon’s personal Prime subscription service.

“Amazon is a retail big so it has some leverage, however there is no means it will not settle for Visa playing cards,” mentioned Ritter. “It is extra doubtless that Amazon has been making use of stress techniques. Main gamers within the retail area are inclined to have bespoke charges with fee corporations, fairly than paying revealed charges. The transfer by Amazon is probably going a method to negotiate a longer-term settlement on charges, and even to push for a freeze to its present charges.”

Amazon will not be the one firm complaining of the excessive prices related to main card networks — one other notable instance was grocery chain Kroger’s, which temporarily banned Visa credit cards at plenty of its shops.

In the meantime, Visa and Mastercard are dealing with rising stress from monetary know-how upstarts like Klarna and Afterpay, which provide “purchase now, pay later” companies that allow consumers break up the price of their purchases over a interval of month-to-month installments.

“This newest twist within the saga actually exhibits the ability of the Amazon model,” mentioned Roger De’Ath, head of U.Okay. at fintech start-up TrueLayer. “No matter the ultimate determination or the answer supplied, its preliminary announcement has now pushed the talk round card charges for retailers into the mainstream.”