Ecommerce giant Amazon has confirmed Ville AM yesterday that it intends to stop accepting payments made using UK Visa credit cards from the start of next year.
The online retailer said UK-issued Visa credit cards will be blocked on its site from January 19.
The move sent shock waves through the UK consumer and retail landscape, with businesses today calling for urgent action to support the payments system as card fees spiral out of control and branches banks are quickly disappearing.
Amazon explained yesterday’s dramatic announcement because of the “high fees Visa charges for processing credit card transactions” and many companies couldn’t agree more: the fees are way too high.
According to Mike Cherry, president of the Federation of Small Businesses (FSB), “the program fees charged by the handful of card providers that dominate the cashless payments space have skyrocketed in recent years.”
Cherry said the payments systems regulator (PSR) “must now take urgent action, with banks increasing fees for depositing and withdrawing cash, and our branch office network disappearing as card fees rise.” multiply, many small businesses are caught between a rock and a hard place. when it comes to payments ”.
The PSR, meanwhile, is keeping a close watch on the market and could introduce caps because it has the power, according to Chris Hemsley, chief executive of the regulator.
He said today: “We are monitoring this market closely and are now thinking about moving this work forward so that we can identify what we can do. “
“We have announced additional work to really investigate this properly so that we can think about what action we need to take, if and when we find significant issues in the way the competition works. “
“We think there are questions as to whether this market is working well enough for retailers and ultimately consumers. “
PSR Managing Director Chris Hemsley
He later said that the PSR has a range of powers, including the power to take action to change the way the market works. “It could also include the introduction of a temporary or more sustainable cap on these fees. “
Hemsley said it would be a big move, so it would take some time to build an evidence base.
“We have been in contact with Amazon as well as with the major card systems and one thing I would like to convey to your listeners is that these are credit cards that we are talking about here, so if you have a debit card Visa… you can still use this card.
A different payment ecosystem
Amazon’s move to ban Visa credit cards issued in the UK is less a direct result of Brexit, as some analysts have suggested, and has more to do with broader sentiment in the payments space. , according to James Booth, VP Head of Partnerships EMEA at payment infrastructure company PPRO.
Booth a dit Ville AM this afternoon that “card fees are high, businesses are struggling to keep up and are forced to pass the cost on to the consumer.”
“Amazon’s ban signals a shift from cards to a more diverse payments ecosystem, which offers businesses and consumers more choice and lower costs. “
James Booth, VP Head of Partnerships EMEA chez PPRO
According to industry estimates, around 77% of online purchases worldwide are not made with an international credit card, but with a local form of payment, be it wallets or bank transfers.
In the UK, more than half of all payments are made by card, with Visa holding an 82% market share, according to a PPRO study.
“But that is changing quickly as new payment methods accelerate,” Booth said.
“Providing a wider and more global range of payment options is a good way for businesses to differentiate themselves from the competitive landscape of e-commerce. But, more importantly, it can lead to significant cost savings for these companies, ”he noted.
Visa, however, said it was disappointed with Amazon’s move, which – according to a company spokesperson – “threatens to restrict consumer choice.”
Interestingly, analysis of Google’s search data found online searches for Visa rival Mastercard rose 1,300% yesterday in the UK.
Company without card
Amazon’s move, coupled with the high fees, could force consumers to look for alternative payment methods, according to Mario Klapsis, vice president of financial services and GM UK at Trustly.
“Amazon’s top priority has always been the customer experience, and payment is one of the most important things,” he said. Ville AM this afternoon.
Klapsis said: “Existing card systems can be expensive, slow and cumbersome. I think e-commerce businesses, and many businesses in general, have a lot to gain by making consumers look for newer, more convenient and often cheaper payment methods, ”
“This move from Amazon may be the first step for many towards a cardless society. “
Mario Klapsis from Trustly
“Check your cards now”
James Andrews, senior personal finance analyst, said buyers would be wise to “check your cards now”.
“Stores are completely free to choose the payment method they want, but the news that Amazon is considering stopping accepting Visa credit cards will be a blow to the millions of Britons who own them,” said Andrews.
Barclaycard and HSBC are among those who use Visa on credit cards.
“With American Express also rejected by many UK retailers, this means that people who are looking for rewards on their spending or trying to split the cost of their purchases with a 0% purchase card on Amazon will effectively be forced to choose one. Mastercard, ”Andrews continued.
He said he hoped Visa and Amazon would settle their differences, but added, “In the meantime, it would be wise to check your cards now.”