Online retailer Amazon has built a reputation on being all things to all people. But from 19th January 2022, that will exclude those wishing to pay by UK-issued Visa credit card. In a powerful move against the “high fees Visa charges for processing credit card transactions“, Amazon has said that it will no longer offer UK Visa credit cards as a payment method, paving the way for other sellers to follow suit and switch to alternative payments.
Amazon broke the news in an email to its customers, admitting that although the move might pose a temporary inconvenience for some customers, it will not affect the use of Visa debit cards and other credit cards.
It is thought Amazon is rallying against ‘interchange fees’, which are cross-border charges that are believed to have increased by almost 500% since Brexit. A report from the British Retail Consortium and advisory firm CMS Payments Intelligence discovered that post-Brexit rule changes mean credit and debit card costs have increased by £150 million annually. In the UK alone, this represents £36.5 million, with many retailers calling for action.
Card processing fees such as the interchange fee are currently absorbed by merchants – including both the host website and individual traders on large multi-seller platforms such as Amazon. These fees risk diluting profit margins on already-under-strain small retailers.
Speaking about the decision, an Amazon spokesperson said:
“The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers.
“These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise.”
Thankfully, new alternative payment solutions are being developed, with instant payments the latest in secure, quick payment technology that would see a reduction in fees.
Instant payments are digital retail payments that are deposited in the destination bank account immediately. Traditionally, payments can take several days to reach a seller’s bank, incurring delays and associated holding fees. One such fee levied by these middlemen is the Merchant Service Charge which can apply a 2% fee on transactions. Outside of the EU, additional charges can be applied to card payments.
With the introduction of the Faster Payments system, instant payments are a viable alternative that bypass card providers and can ensure swifter transfer of funds almost instantaneously, making them ideal for omnichannel retailers.
For now, instant payments can only be accepted via a mobile app, but pressure is being put on the Bank of England to make this cheaper alternative payment solution available on regular card payments too.
Amazon’s rejection of UK Visa credit card payments is the first example of a major player renouncing the exorbitant fees associated with traditional card transactions. With more retailers looking to cut costs, instant payments could provide a cost-effective and streamlined solution.
Get in touch with us at MultiPay Global Solutions to find out how your business could benefit from instant payments.
