Online retail giant, Amazon, recently announced they will no longer accept the use of Visa Credit Card payments from 19 January 2022, causing confusion and panic amongst consumers.
Why is Amazon Not Accepting Visa Credit Cards?
Amazon has stated that due to the high transaction fees associated with Visa credit card payments, they will be ceasing the payment method. Explaining the move in more detail, Amazon said that the increased transaction fee costs were beginning to prove to be an obstacle when it comes to offering customers the best prices.
Further to this, Amazon suggested that due to advances in technology, costs should be decreasing, “but instead, they continue to stay high or even rise”.
In response to this, Visa has expressed its disappointment at the decision, stating, “when consumer choice is limited, nobody wins”.
Whilst Amazon bosses have declined to confirm how much Visa credit card transaction fees cost.
How Will Consumers Be Affected?
If Amazon does go ahead with it’s plans to scrap Visa credit cards, a huge section of consumers will have fewer options when it comes to Amazon payments.
Presently, both HSBC and Barclaycard customers use Visa credit cards, meaning that their customers are to be affected if Amazon does go ahead with ceasing the use of Visa credit cards in January 2022.
By cutting off a revenue stream, businesses risk losing a significant proportion of their income and consumer base. According to a recent article in The Independent, Amazon is estimated to lose approximately £1.4bn in sales if it goes ahead with it’s proposed plans to axe Visa credit cards.
The Impact of Credit Card Transaction Fees
Mike Cherry, FSB national chairman, told the BBC how typically, small businesses are the ones most negatively impacted by high transaction fees. However, now huge firms like Amazon are publicly calling out the costs, will Visa reconsider their transaction fees?
In October 2020, the British Retail Consortium accused both Mastercard and Visa of charging excessive transaction fees, noting that fees had doubled in two years.
As of April 2021, the three largest credit card companies in the UK (Visa, Mastercard and American Express) charged businesses the following processing fees:
- Mastercard – 1.55% to 2.6%
- Visa – 1.43% to 2.4%
- American Express – 2.5% to 3.5%
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