In a dispute over payment rates, Amazon appears to have backed down from a public warning to stop supporting Visa payments in the UK. The e-commerce behemoth sent an email to Amazon.co.uk consumers today alerting them that the “anticipated change” that was supposed to happen on January 19 has been postponed. Although it is unclear, whether the two corporations have reached a long-term agreement on fees.
“On January 19, the anticipated change governing the use of Visa credit cards on Amazon.co.uk will no longer be implemented.” In an email sent to UK customers, Amazon states, “We are working closely with Visa on a potential solution that will enable consumers to continue using their Visa credit cards on Amazon.co.uk.” “We will provide you advance notice if we make any changes pertaining to Visa credit cards,” it continues, adding, “Until then, you can continue to use Visa credit cards, debit cards, Mastercard, American Express, and Eurocard as you do now.”
When contact for comment, Amazon, and Visa both verified the news – but provided no other information. Amazon declined to comment more than its brief statement to users that nothing is changing for the time being. While a Visa spokesperson did not elaborate on what “potential solutions” might mean in practice, it did say in a statement that “Amazon customers can continue to use Visa cards on Amazon.co.uk after January 19 while we work closely together to reach an agreement,” implying that fee negotiations are still ongoing.
Late last year, Amazon sent an email to UK users blaming high payment fees levied by Visa for credit card transactions for terminating support for Visa payments, advising Brits to make alternative arrangements for paying for their Amazon.co.uk purchases. Its widely circulated mass email appeared to be an attempt to use its market strength to wrest better terms from Visa. It is unclear whether this was enough to persuade Visa to lower its credit card costs, or whether Amazon just decided to pull back from the verge of causing major disruption to UK buyers.
If the latter is true, Amazon has already given Visa-based payment method users in the UK months of anxiety about whether they will be able to make purchases on the site in the near future. Visa had previously expressed disappointment that Amazon “is threatening to restrict consumer choice in the future,” stating, “When consumer choice is constrained, nobody benefits.” Visa had stated at the time that it was working with Amazon to find a solution that would allow Visa cardholders to continue using their Visa credit cards issued in the United Kingdom on Amazon’s website.
Months later, it appears that conversations are still ongoing — albeit without the threat of a public deadline for Amazon to stop taking UK-issued Visa cards. The UK’s exit from the European Union has connected to rising Visa transaction fees on Amazon.co.uk, as Brexit removed the cap on fees that can be levied on transactions between the UK and the European Economic Area/EU.
However, the issue is likely to relate to the details of Amazon’s UK business structure, as the company invoices UK clients through an EU-based organization, transferring money from its UK website to its European headquarters in Luxembourg. According to a report published by City AM in August, Amazon’s corporate structure allowed it to avoid paying significantly greater amounts in UK tax. However, it appears that the same ‘earnings are shifting’ system costs Amazon significantly more in Visa ‘taxes’ than it would prefer to pay.
