Visa still believes it can make up with Amazon and convince the e-commerce giant to allow consumers to keep using its credit cards in the UK.
Amazon recently revealed it will soon no longer allow UK customers to pay for items using Visa credit cards, citing “the continued high cost of payments”. It later emerged the firm may also end its partnership with Visa on co-branded credit cards in the US.
Speaking at a recent investor conference, Visa Chief Financial Officer Vasant Prabhu allegedly said Amazon’s move was unexpected, especially knowing how tightly regulated merchant fees are in the country.
“There was no need to punish U.K. consumers for something that had nothing to do with them,” Prabhu was cited as saying by Bloomberg. “The unfortunate thing here is they’ve chosen to penalize a group of consumers that have really nothing to do, have no dog in this fight.”
Amazon, on the other hand, says its hand was forced by the rising cost of accepting payments through the company’s credit cards. It was even reported that the e-commerce giant is thinking of moving its co-branded credit card to Mastercard.
According to the Bloomberg report, Visa and Mastercard are the two major payment networks that dictate the rates merchants pay in swipe fees. The majority of those fees go to the banks, but Visa has long been criticized for the way it calculates these rates.
“We’ve sorted these out before, we will get back to the point where our relationship with Amazon goes back to where it used to be including the co-brand,” Prabhu said. “Of course, it takes two to tango.”
Favoring own credit and payment cards
Prabhu’s speech followed a recent interview between Visa CEO Al Kelly and the Financial Times about the issue, saying the company was in a position where it couldn’t satisfy everybody:
“At Visa, we have the responsibility in the markets where pricing is unregulated to set price, and nobody’s ever happy with us. If the price comes down, financial institutions aren’t happy, the price goes up, merchants aren’t happy.”
Amazon recently introduced an additional 0.5% charge for customers using the Visa credit card for payments in Singapore and Australia, and offered a discount on the first purchase made with an alternative payment method.
In the UK, Visa began charging an extra 1.5% on cross-border payments between the UK and EU, given that the EU-enforced cap on fees no longer exists after Brexit.
Some are even saying that Visa’s end goal here is to increase the usage of its line of credit and payment cards, which are issued by Mastercard. Visa denied these claims.
With its move in the UK, the retailer is taking a page from rivals Walmart and Kroger, which have also temporarily instituted similar bans on Visa cards.