Amazon to stop accepting UK Visa credit cards

(CMR) Amazon said it intends to stop accepting payments made using UK Visa credit cards from early next year because Visa's fees are too high. Visa credit cards issued in the UK will be blocked from use on its site from January 19.

The move has reportedly sent shockwaves through Britain's consumer and retail landscape, with businesses calling for urgent action to support the payments system as card fees spiral out of control and bank branches are rapidly closing.

“The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers,” an Amazon spokesperson said about the decision.

Customers will still be able to use Visa debit cards, MasterCard credit cards, American Express credit cards, as well as Visa credit cards issued outside of the UK. They also have the option to set up direct debit.  Amazon is offering some UK customers a £20 ($27) incentive for setting a debit or non-Visa credit card as the payment default.

Visa has expressed disappointment that Amazon is restricting the choice of customers.

“We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins,” a Visa spokesperson said.

Visa, whose stock slumped more than 3%, is working towards a resolution to reverse Amazon's decision.

Quartz explained that Brexit had influenced the fee issue. The main point of contention is the “interchange fee”—a charge levied on merchants that goes to issuing banks whenever a customer pays with plastic.

According to Quartz, in 2015, a European Union (EU) law had capped credit card interchange fees at 0.3%. However, after Brexit, the UK no longer enjoys that ceiling. Visa has increased these charges to 1.5% for Brits. MasterCard made an identical fee hike, but Amazon hasn't blocked it. No particular reason has been given for singling out Visa.

While Visa Uk is now the point of contention, Amazon is reportedly taking on Visa worldwide. In September this year, Amazon imposed a surcharge for Visa credit cards in Singapore.