Amazon drops plan to ban UK Visa credit cards

The online retailer said in November that Visa payment rates were an impediment to offering the best prices for customers

Amazon has reversed its plan to block UK-issued Visa credit cards being used for payments on its British website, following talks with Visa.

In an email to consumers, Amazon said that the expected change affecting the use of Visa credit cards (but not debit cards) on Amazon.co.uk will no longer take effect on 19th January. The companies are now in talks to reach an agreement on payment rates.

The dispute between the firms started last November, after Amazon told customers that it would ban the cards because of Visa's hefty transaction fees. In response, Visa accused the company of threatening to restrict customer choice.

"When consumer choice is limited, nobody wins," the payment processor said.

In March last year, it emerged that Visa was considering post-Brexit fee hikes for British customers purchasing goods from the European Economic Area.

The company increased interchange fees (the payments for simply using a card) in October. These fees previously stood at 0.2 per cent for debit cards and 0.3 per cent for credit cards, which Visa increased to 1.15 per cent and 1.5 per cent, respectively.

Visa also increased the fees for using business cards to 1.6 per cent, and the fees for corporate and purchasing cards to 1.8 per cent.

It was not the only payment operator to raise prices following Brexit. Mastercard also upped the interchange charge on cross-border transactions between businesses in the EU and the UK last year.

Amazon and Visa claim their disagreement has nothing to do with Brexit.

According to Mintel data, nearly 90 per cent of Britons purchase on Amazon, and it is estimated that there are around 21 million Amazon Prime subscribers in the UK.

Last month, research showed that Amazon would lose over £1.4 billion in UK sales if it banned Visa credit cards, while Visa would also have taken a hit.

It is unclear whether this is an outright U-turn by Amazon or just a postponement of the ban, but the announcement means that millions of Britons will be able to continue using Visa cards after 19th January.

"Should we make any changes related to Visa credit cards, we will give you advance notice," the company said in its email.