On Wednesday morning, the online retail giant emailed consumers to confirm that the restriction would come into effect from 19 January 2022. They also clarified that no other credit cards or Visa debit cards would be affected. Visa credit cards issued outside the UK will be exempted as well.
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Amazon explained it took the decision due to the hefty costs Visa charges for processing credit card transactions on its UK cards. Visa accused the corporation of limiting its customers' options. It blamed the expense of processing the payments in an email to site visitors and wrote:
Starting 19 January 2022, we will unfortunately no longer accept Visa credit cards issued in the UK, due to the high fees Visa charges for processing credit card transactions.
Inconvenient charges
While Amazon accepted that they would discontinue the UK issued visa credit cards, it is, however, not leaving the customers high and dry. The firm said it will continue to take Visa debit cards and other credit cards such as Mastercard and American Express. Nevertheless, the shift would still be inconvenient for some consumers.
There are a variety of expenses associated with card payments, including interchange fees and other transaction charges. Amazon is said to be particularly enraged by an increase in so-called interchange fees, or extra cross-border costs, which it claims have increased five-fold since Brexit. If passed on, such fees would reduce profits and boost costs. This fee is currently paid by Amazon or merchants on its platform.
Interchange cost
Interchange costs are usually a percentage of the transaction cost and are greater for credit card transactions and those conducted remotely, such as internet sales, but there are limits on payments within the UK. Visa expressed its disappointment with Amazon's promise to limit consumer choice in the future in a statement and said,
When consumer choice is limited, nobody wins. We have a longstanding relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions come January 2022.
It also stated that UK customers could use their cards at Amazon during the holiday season, however, it would have to stop beyond that. An Amazon spokesperson commented:
The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should be going down over time with technological advancements, but instead, they continue to stay high or even rise.
