Amazon temporarily suspends Visa credit card ban

Amazon has delayed its proposed ban of Visa credit cards on its UK website.

The change, which was scheduled to take place on Wednesday, has been postponed as both parties attempt to find a solution to the ongoing feud.

Online shoppers got a bit of a shock in November last year when the e-commerce giant announced that it would no longer accept Visa credit cards for online purchases. The bold move was in retaliation for the “high fees Visa charges for processing credit card transactions”, according to an Amazon spokesperson at the time. 

The U-turn was announced by Amazon on Monday, who said in an email to customers: “The expected change regarding the use of Visa credit cards on Amazon.co.uk will no longer take place on 19 January. 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, American Express, and Eurocard as you do today.”

This last-minute delay temporarily resolves what has been described as a “game of corporate chicken”. Should it have gone ahead both companies would have suffered, although Visa would likely have taken the biggest hit.

Around 90% of UK citizens shop at Amazon, and should Visa credit cards have been an unusable payment method, it would have caused significant losses in card handling fees.

Some experts have doubted whether Amazon would ever go ahead with the decision, suggesting it was merely a negotiating tactic when the announcement was made last November.

This may indeed be the case, as the two businesses appear to be in talks while the truce remains in place.

Speaking on the saga, Susannah Streeter, a senior investment analyst at Hargreaves Landsdown said: "The two sides have not completely backed down but last ditch talks over the weekend appear to have been productive and certainly Amazon is coming across as a lot more conciliatory in tone.

"Higher fees being charged by Visa remain a bugbear, and it's likely that a long term solution will involve some movement here, but it's not in either companies' interest for a war of attrition to re-start, with the prospect of significant losses in UK business for either side.

"This is a niggling headache Visa will want to see lifted as it grapples with competition from start-ups and more established rivals."

While some may view the decision as a victory for Visa, the opposite is likely the case. Upon making the decision, Amazon offered customers between £10 and £20 if they removed a Visa credit card as their primary payment method.

Naturally, many people jumped at the opportunity for some pre-Christmas cash. While some might switch back, the scale of the Amazon UK market is likely to leave a sour taste for Visa.