Amazon says it is considering removing Visa as a US co-branded credit card partner
Visa hopes to resolve a credit card fee dispute with Amazon.com Inc. in the UK and hopes to continue its credit card partnership with major US e-commerce firm Chief Financial Officer. He told Reuters.
Amazon announced on Wednesday that it will no longer pay with UK Visa credit cards starting in mid-January next year.
“We have solved these problems in the past, but we believe that they will be solved in the future,” Vasant Prab said in an interview on Friday. “The British consumer has no control.”
Visa shares suffered losses that ranged from a 1.4% drop throughout the day to a 0.5% drop after Reuters reported Prabs’ comments. After that, the stock rallied, eventually falling 1.4%.
Amazon said in a statement Wednesday that credit card prices “have declined over time with technological advances, but have remained high or even increased”.
Analysts suggest the position could be a negotiating tactic. In the past, other major retailers settled disputes with Visa after announcing that they would no longer use credit cards in a narrow segment of the business.
For example, a division at Walmart Inc in Canada said it would stop accepting Visa credit cards in 2016 because it couldn’t reach a price agreement. Seven months later, the two companies said they had solved the problem.
Mr Prabu said Wednesday’s report suggesting the controversy was the result of EU restrictions on charging that would no longer apply in the UK after Brexit were “totally inaccurate”.
The rules apply to cross-border transactions between the EU and the UK, but the dispute concerns domestic transactions, he said.
In recent months, Amazon has introduced additional fees for customers using Visa credit cards in Singapore and Australia. This is because relations between the two companies appear to be deteriorating and because of the high price to be paid.
Some analysts have raised concerns that Amazon’s move in the UK could signal retailers to refuse Visa credit cards elsewhere.
“Limiting consumer choices doesn’t help retailers either,” Prabhu said. “If a retailer tells you you can’t use your favorite card, it’s useless as a consumer.
Amazon is also considering removing Visa as a co-branded credit card partner in the US, saying this is being discussed with Mastercard and Visa.
Visa said it was still in talks to continue its partnership with Amazon and hoped they would continue.
“We want to get to a point where our relationship with Amazon returns to normal,” Prab said.