Amazon will stop accepting Visa credit cards in the UK from 19 January 2022, meaning cards from some of the country’s largest banks will no longer work with the world’s biggest online retailer.
The news was communicated to customers today via email in which Amazon revealed the change is due to the ‘high fees’ Visa charges for processing credit card transactions.
Visa debit cards and credit cards from other payment networks, such as Mastercard, will still be accepted.
Why won’t Amazon accept Visa credit cards?
Earlier this year, Visa increased its ‘interchange fee’ for some online credit card payments fivefold to 1.5%. The fee is an amount taken from a payment to cover the costs of sending money between your bank and a retailer’s bank.
The higher fee is charged on payments from UK customers to EU merchants. It might be that Amazon – with a European HQ in Luxembourg – counts as an EU merchant in this case, though Which? did not receive confirmation of this from either Visa or Amazon ahead of publication.
Before Brexit, interchange fees like these were capped at 0.3% by the European Commission. Mastercard has also increased its fees on cross border payments to 1.5%, though Amazon has not announced a similar ban on Mastercard credit cards. We asked Amazon if it would be banning Mastercard payments as well on this basis and it declined to comment.
Gareth Shaw, Which? Head of Money said: ‘There have been long-standing concerns about soaring credit card fees that affect both consumers and businesses.
‘We would encourage Amazon and Visa to urgently find a resolution to prevent any restriction on consumer choice. Regulators should also look very closely at this development and work to establish whether fees in the credit card market are fair and what impact this will have on competition.’
Which credit cards will be affected?
Amazon’s announcement will come as a shock to UK customers who use Visa credit cards with the retailer. Major Visa credit cards include Barclaycard, HSBC and Nationwide.
However, many major credit cards operate on the Mastercard network – including those from Natwest, Halifax and TSB. Amazon’s own credit card also uses the Mastercard network.
Since Amazon will continue accepting Mastercard credit cards, many customers will not be affected at all. Still, this unexpected turn will be frustrating for many UK credit card customers.
A Visa spokesperson told Which?: ‘UK shoppers can use their Visa debit and credit cards at Amazon UK today and throughout the holiday season. We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins.
‘We have a long-standing 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.’
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When should you pay by credit card?
Amazon customers with Visa credit cards could miss out on a major consumer protection thanks to this change.
If you pay via credit card for goods or services over £100 and under £30,000 you’ll be able to claim money back from your card provider under Section 75 of the Consumer Credit Act if something goes wrong.
Any Visa credit cardholders who simply switch to a debit card will no longer have this powerful protection. Amazon customers who want Section 75 cover will need to switch to a Mastercard or American Express credit card, which may involve a new application that could impact their credit score if they don’t already have one.
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