Amazon has reversed a decision to ban its customers from using UK-issued Visa credit cards as the two companies continue to try to resolve a dispute over payment fees.
The online retailer had been expected to introduce the ban from tomorrow but it emailed customers yesterday to announce a last-minute reprieve. The company said: “The expected change regarding the use of Visa credit cards on Amazon.co.uk will no longer take place on January 19.
“We are working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk.”
A Visa spokesman said: “Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely together to reach an agreement.”
In November, when announcing the ban, Amazon blamed the “high fees” that Visa was charging it to process customer payments. At the time Visa said the tech giant was “restricting choice”.
In 2020 the credit card company raised its “interchange fees” on cross-border transactions between the UK and EU. The decision is thought to have cost retailers an extra £150 million a year, which will have largely been passed on to shoppers in higher prices.
The EU capped interchange fees for all transactions in 2015 but the UK’s departure from the trading bloc meant the limit no longer applies to payments between Britain and member states.
The fact that Amazon announced a change of heart without a deal apparently having been struck suggests that it may have blinked first in the stand-off.
As many as one in ten transactions on the website were thought to have been made using a Visa credit card.
However, some analysts said that Amazon might have backed down from a position of strength after customers had already changed their payment method in advance. That it has not ruled out a future ban also suggested that Visa may have to compromise.
Whatever the outcome, Susannah Streeter, an analyst at Hargreaves Lansdown, believes that consumers are the loser. She said: “Unfortunately, this kind of 11th-hour change is no good to people who had been forced to apply for a new Mastercard credit card. If you’ve already applied, it will already show on your credit record.
“It’s hardly fair that consumers should pay the price for two massive corporations facing off.”
However, Jenny Ross, the editor of Which? Money, said: “Amazon reversing its decision to ban Visa credit cards for now will be good news for many customers, but we would encourage Amazon and Visa to urgently find a long-term resolution to prevent any unnecessary inconvenience or restriction on consumer choice in future.”
She added: “There have been longstanding concerns about credit card fees that affect both consumers and businesses, so the regulator should urgently take forward its proposed work examining card fees.”
Chris Hemsley, managing director of the Payment Systems Regulator, said: “We will focus more on improving competition between payment systems. This is important because we know that the future of retail payments is becoming increasingly about digital payments, most of which are currently made using card payment systems.”