After a tense few months of negotiation, Amazon has agreed to keep working with Visa to continue accepting payments via this payment method.
In 2021, Visa started to charge 1.5% of the transaction value for any credit card payments and 1.15% for debit card transactions made online between the EU and the UK.
As a result, Amazon announced that they would not be allowing UK customers to make payments using Visa cards due to the high processing fees charged by Visa for credit card transactions. The decision was meant to come into play from the 19th January 2022.
In January, they announced that the decision had been postponed and that Visa and Amazon were working together to come up with a solution.
Now, the e-commerce giant has said that they have “reached a global agreement with Visa that allows all customers to continue using their Visa credit cards in our stores”.
Surcharge Lifted
Not only is this relevant for UK customers, but the company also confirmed that the surcharge currently applied to Visa credit cards on Amazon’s Singaporean and Australian sites will be lifted from February 17th 2022.
Before this, Singapore and Australia customers were charged a 0.5% surcharge when using the Visa credit card to make purchases on Amazon. The surcharge applied to any goods sold by Amazon itself, including those sold by third parties, from Singapore and from overseas. Although, services such as Twitch, Amazon Prime and Amazon Fresh were not affected by the surcharge. Now, all fees have been waived.
“Broad, global agreement”
Visa has announced that they are pleased to have reached this “broad, global agreement”. As part of the deal, Visa announced that they will be collaborating with Amazon on product and technology initiatives in the future to further improve the payment experience.
All of this seems more promising with an indication of a more collaborative and cooperative relationship going forward, in contrast to the rocky relationship the two companies have had regarding online fees in the last couple of years.
The Rise of BNPL
Amazon is known as a leader in the e-commerce sector and Visa is not their only payment method. Recently, they have been one of the marketplaces working with “buy now, pay later” services, helping customers to spread the cost of their purchases over multiple months, often borrowing beyond their credit limit.
Amazon is working with Barclays Bank to facilitate the BNPL services and all transactions are fully regulated by the FCA (Financial Conduct Authority). However, there is some skepticism around this decision as the APR is 10.9%.