Amazon to reject Visa credit cards in fees row

MILLIONS of shoppers will have to find other ways to pay for their Amazon orders after the retailer said yesterday it would stop accepting Visa credit cards.

The change, which takes effect in January, follows a dispute over the fees that Visa charges to process each order, which have long been criticised as a rip-off.

There are concerns that the fees, which are passed on to shoppers, are going up at a time when new technology should mean processing is easier and cheaper.

The decision by Amazon to stop accepting Visa credit cards, but not debit cards, from January 19 has infuriated bosses at the finance giant.

It will force millions to find an alternative, such as a credit card backed by Mastercard or American Express, or switching to a debit card, which does not offer the same level of protection. Many people deliberately use a credit card for major purchases because it can protect them from fraud.

There are about 66 million credit cards in use in the UK. Mastercard has the biggest share and Visa holds about a third.

Head of money at the consumer group Which? Gareth Shaw said: ‘Consumers used to paying with a Visa credit card should be aware that switching to a debit card would mean they lose some valuable legal protections that enable them to get their money back if anything goes wrong with a purchase.

‘We would encourage Amazon and Visa to urgently find a resolution to prevent any restriction on consumer choice.

‘Regulators should also look very closely at this development and work to establish whether fees in the credit card market are fair and what impact this will have on competition.’

The decision by Amazon to target Visa is surprising because historically its charges, known as interchange fees, are much the same as Mastercard’s.

Amazon has not said why Visa has been singled out, but it may be because it has reached a special deal with Mastercard.

Last year the British courts ruled that the fees imposed by Visa and Mastercard were a breach of EU and UK competition laws. And both have been targeted for compensation claims on behalf of shopkeepers and customers running to billions of pounds.

Retail industry bosses recently complained that the fees add up to £1.3 billion a year, an average of £46 per household.

The situation was made worse earlier this year when Visa and Mastercard increased the fees for purchases on transactions between the UK and Europe following Brexit.

The fee is capped in the EU but since Britain left that limit does not apply any more.

Visa’s credit card fee rose from 0.3 per cent to 1.5 per cent, mirroring a rise by Mastercard. There were also rises for debit card transactions.

Amazon, which controls about £1 in every £4 spent online in Britain, has offered some customers £20 off their next purchase.

Visa said: ‘We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins.

‘We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions.’

‘Urgently find a resolution’