The Amazon & Visa fallout

[Alex321]

Here is what caused the issue.

With UK leaving EU, VISA and other card issuers no longer have to toe the line EU line which capped the interchange fee to 0.3% for credit cards and 0.2% for debit. Visa issued notice to its members that they will hike the fee to 1.5% for credit cards and 1.15% for debit cards. Which is a hefty jump. The planned hike I believe was scheduled for April 2022. So Amazon spat the dummy.

And yet they didn't with Mastercard, which has exactly the same increase planned, nor for Visa Debit cards, which are nearly as much.

Amazon are a credit card supplier with Mastercard, and I suspect that one of the Visa negotiating points might have been around the fact that giving preferential treatment to Mastercard may well be a breach of regulations.

 

[C R]

And yet they didn't with Mastercard, which has exactly the same increase planned, nor for Visa Debit cards, which are nearly as much.

Amazon are a credit card supplier with Mastercard, and I suspect that one of the Visa negotiating points might have been around the fact that giving preferential treatment to Mastercard may well be a breach of regulations.

I am guessing that they probably get a special deal with master card and they may be trying to squeeze a deal from visa. Given visa's dominant position in the UK market and likely customers inertia I think amazon probably misjudged the strength of their hand.

 

[Arrowfoot]

And yet they didn't with Mastercard, which has exactly the same increase planned, nor for Visa Debit cards, which are nearly as much.

Amazon are a credit card supplier with Mastercard, and I suspect that one of the Visa negotiating points might have been around the fact that giving preferential treatment to Mastercard may well be a breach of regulations.

VISA has 80% market share in the UK.

 

[mistyoptic]

Equally it could be that Visa are busy giving in so Amazon are maintaining the status quo until it is resolved. What has happened today gives us no clue as to who is capitulating the most.

Comment this morning on the Interactive Investor news pages

"Commenting, Myron Jobson, Personal Finance Campaigner, interactive investor, says: Amazon's attempt to strong-arm Visa into reducing its transaction fees has failed in spectacular fashion and has left the online retail giant with its tail between its leg. Visa effectively called the bluff, dug its heels in and Amazon was first to flinch. Amazon has now taken a more conciliatory tone, claiming to be working with the credit card company on a potential solution.
“Visa's scale means that Amazon had more to lose if it went ahead with the ban. Amazon simply had to weigh up the potential cost of abandoned purchases and the potential loss of traffic to its website because of the ban with the cost of paying Visa’s transaction fees - and the scales tipped in Visa’s favour.

“There may be more twists and turns to come in the saga, but for now, Visa credit card users can continue to flash their plastic on Amazon.”

 

[markemark]

Comment this morning on the Interactive Investor news pages

"Commenting, Myron Jobson, Personal Finance Campaigner, interactive investor, says: Amazon's attempt to strong-arm Visa into reducing its transaction fees has failed in spectacular fashion and has left the online retail giant with its tail between its leg. Visa effectively called the bluff, dug its heels in and Amazon was first to flinch. Amazon has now taken a more conciliatory tone, claiming to be working with the credit card company on a potential solution.
“Visa's scale means that Amazon had more to lose if it went ahead with the ban. Amazon simply had to weigh up the potential cost of abandoned purchases and the potential loss of traffic to its website because of the ban with the cost of paying Visa’s transaction fees - and the scales tipped in Visa’s favour.

“There may be more twists and turns to come in the saga, but for now, Visa credit card users can continue to flash their plastic on Amazon.”

Unless they are privy to the negotiations, it's just speculation. May well be correct, but it's speculation nonetheless.

 

[Time Waster]

It did seem that amazon weren't playing with a strong hand. I used to have Mastercards from my banks both debit and credit but they all switched to visa years ago. In one case because Mastercard kept having issues.

All our cards are visa based so amazon prime gets dropped and we just use the better Netflix and go over to ebay. I'm sure others might do similar of they hadn't climbed down.

 

[vickster]

I don't think I have a VISA credit card, all Mastercard these days (debit is VISA but I only very rarely use that online)

 

[C R]

I don't think I have a VISA credit card, all Mastercard these days (debit is VISA but I only very rarely use that online)

Someone mentioned upthread that 80% of credit cards in the UK are visa. I have read in several places that visa is dominant, but haven't seen actual figures quoted, and a cursory search doesn't turn up much in terms of concrete figures.

 

[vickster]

Actually my not oft used commercial credit card is Visa, other 5 or 6 personal CCs are all Mastercard, so <20% Visa for me