Amazon has reached an agreement with Visa to accept its credit cards on its network, ending a standoff between the two that threatened to disrupt e-commerce payments and deal a blow to the US-based payment processor.
Details of the deal were not disclosed, but Visa and other payment cards faced increasing pressure on their fees as more shoppers went online during the pandemic. The fight had highlighted the growing influence of retailers in the fee battle.
Amazon had said in November that it was considering dropping Visa as a partner on its US co-branded credit card, after previously confirming that it would no longer accept Visa credit cards in the UK because of high transaction fees.
The deal announced on Thursday means Amazon customers can continue to use Visa credit cards at its stores, the e-commerce group said in a statement.
Neither side has said what fees will be charged in the future – an issue that has come to a head particularly in the UK after an EU-imposed cap on card fees is no longer in place post-Brexit.
The dispute between Amazon and Visa in the UK was seen as a bad sign for the card industry by some analysts, who argued it could portend a fight in the much larger US market.
British lawmakers said last month they planned to look into increases in fees Visa and Mastercard charge companies after the country’s payments regulator found no evidence to justify the increases.
Last October, Visa started charging 1.5% of the transaction amount for credit card payments made online or over the phone between the UK and the EU, and 1.15% for debit card transactions, above 0 .3% and 0.2%, respectively.
Average credit card processing fees across the industry range between 1.5% and 3.5%, according to analysts.
In the past, retailers accepted credit card processing charges as an unavoidable cost, but that may be changing due to innovations and increased consumer choice in the payments industry.
Credit cards accounted for a third of US e-commerce spending in 2020, according to payments giant WorldPay, but mobile payment options like Venmo and “buy now, pay later” (BNPL) financing plans are gaining. ground.
While alternative payments have been booming for years, the pandemic has accelerated a downward trend in credit card applications and boosted the popularity of BNPL financing.
Credit cards’ share of e-commerce spending in North America dropped 7% last year, according to WorldPay, while BNPL’s share increased 78%.
In the past, other major retailers have settled fee disputes with Visa after announcing that they would no longer accept Visa credit cards in narrow segments of their business.
Walmart’s Canada unit, for example, said in 2016 that it would stop accepting Visa credit cards after failing to agree on fees. Seven months later, the companies said they had resolved the matter.
Visa said it was pleased to have reached a comprehensive global agreement with Amazon.
“This agreement includes acceptance of Visa across all Amazon stores and websites today, as well as a joint commitment to collaboration on new products and technology initiatives,” a Visa spokesperson said in an email.
© Thomson Reuters 2022