Amazon Visa Battle: Are the Good Times Over for Card Dealers?

Amazon announced on November 17 that it will no longer accept credit cards issued by Visa in the UK from January 19 next year , and said it is considering abandoning Visa as its US partner-branded credit card .

In response, Visa CEO Al Kelly said that Amazon's decision to ban British Visa credit cards from its platform was strange and the two sides were currently in challenging negotiations on the issue .

Amazon is understood to have taken the step because of Visa's high fees, but according to payments company Bambora, Visa and Mastercard transaction fees are almost the same in the UK .

Earlier this year, Visa and Mastercard announced that they would increase the transaction fees applicable between the UK and the EU after Brexit . For digital payments without a physical card, the debit transaction fees increased from 0.2% and 0.3% respectively to 1.15%, and the credit card transaction fees increased to 1.5%.

Even before Visa raised its rates , Amazon had already taken steps to limit its use in markets such as Singapore and Australia , where it offered vouchers to customers who used payment methods other than Visa .

In addition, according to the editor , the cost of card merchants processing transactions has been declining in recent years, but the fees they charge have not changed much . According to data from consulting firm CMSPI , the profit margins of payment networks and issuers are 30% to 50%, while the retail profit margin is only about 3 % .

For decades, Visa and Mastercard have maintained a duopoly in global payments , but in recent years , financial technology competition and political pressure have continued to threaten and weaken their influence.

With the emergence of various new payment methods , retailers have also gained some bargaining chips. Financial services companies such as PayPal have been building their own payment systems. Last month, Citigroup also launched a plan to allow retailers to bypass the card system and directly conduct related payment activities .

Amazon is also constantly trying to bypass the card system for payment methods. In August this year , the company said it would provide BNPL ( buy now pay later ) services to US shoppers through third-party service provider Affirm , allowing consumers to pay in installments for goods of $ 50 or more.

However, despite the heavy targeting of Visa, according to industry analyst Kenneth Suchoski , Amazon's move will have little impact on Visa 's bottom line . This should not be seen as a shock because Amazon has been using all available negotiation tools to reduce the cost of processing payments .

However, when the city is on fire, the fish in the pond will be affected, and the platform sellers will be affected to some extent in this dispute. Since the platform's subsequent policies are still unclear , the editor recommends that you make preparations early and add backup payment methods to prevent any accidents .

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