Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Fee Dispute: Amazon to stop accepting Visa cards in the UK
Amazon.com
Inc’s latest spat with Visa shows big retailers, armed with a growing array of payment options, are gaining the upper hand in their power struggle with card providers, but it’s not a crisis for the payment company.
Amazon said last week that it would stop accepting Visa credit cards issued in the United Kingdom from Jan. 19, 2022, saying that despite technology advancements the fees on such transactions remained high or in some cases were rising.
While Amazon may yet back down on the UK front, where the company accounts for less than one per cent of Visa’s credit card volume, according to an estimate by Piper Sandler analysts, the dispute is a bad sign for the card industry. Some analysts said it could presage a fight in the much bigger U.S. market.
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“Amazon is treating this dispute with Visa as an experiment,” said Piper Sandler analyst Christopher Donat. “Our biggest concern is that Amazon seeks concessions from Visa in other geographies.”
Visa Chief Financial Officer Vasant Prabhu told Reuters in an interview on Friday that he expected a resolution. “We’ve resolved these things in the past and I believe we’ll resolve them in the future,” he said. Amazon declined to comment.
Credit cards dominated a third of North American e-commerce spending in 2020, according to payments giant WorldPay, but mobile payment options like Venmo and ‘buy now, pay later’ (BNPL) financing plans are chipping away at their market share.
While alternative payments have been growing for years, the pandemic accelerated a downward trend in credit card applications boosting the popularity of BNPL financing, especially among younger consumers.
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Credit cards’ share of North American e-commerce spending declined seven per cent last year, according to WorldPay, while BNPL’s share increased 78 per cent, making it the fastest-growing form of payment.
In August, Amazon partnered with BNPL provider Affirm to offer installment financing option on U.S. Amazon purchases.
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