Amazon backs down over Visa UK credit card charges

Amazon.com Inc (NASDAQ:AMZN) has performed an apparent U-turn on accepting credit card payments from Visa (NYSE:V) customers in the UK.

In November, the online retail colossus said its UK business will stop accepting payments from the cards issuer, which it said was because of the high transaction fees charged.

After Visa (NYSE:V) was reported to have refused to change its fees, Amazon appeared today to have climbed down from its high horse.

In an email to customers on Monday, Amazon UK said: “The expected change regarding the use of Visa (NYSE:V) credit cards on Amazon.co.uk will no longer take place on January 19. We are working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk.

“Should we make any changes related to Visa credit cards, we will give you advance notice. Until then, you can continue to use Visa credit cards, debit cards, Mastercard (NYSE:MA), American Express, and Eurocard as you do today.”

Financial commentator Myron Jobson at broker Interactive Investor, said: “Amazon’s attempt to strong-arm Visa into reducing its transaction fees has failed in spectacular fashion and has left the online retail giant with its tail between its legs.

“Visa effectively called the bluff, dug its heels in and Amazon was first to flinch. Amazon has now taken a more conciliatory tone, claiming to be working with the credit card company on a potential solution.”

Jobson said the scale of Visa’s network, even though it is smaller in terms of revenue and market cap, meant that Amazon had more to lose if it went ahead with the ban.

“Amazon simply had to weigh up the potential cost of abandoned purchases and the potential loss of traffic to its website because of the ban with the cost of paying Visa’s transaction fees – and the scales tipped in Visa’s favour,” he said.

“There may be more twists and turns to come in the saga, but for now, Visa credit card users can continue to flash their plastic on Amazon.”

Story by ProactiveInvestors