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Nov. 17, 2021, 10:27 a.m. EST

Visa is ‘very disappointed’ Amazon will stop accepting its U.K. credit cards

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By Barbara Kollmeyer and Emily Bary

Blaming the “high cost of payments,” Amazon.com said starting next year, it will no longer accept Visa credit-cards issued in the U.K.

“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,” said an Amazon /zigman2/quotes/210331248/composite AMZN +1.33% spokesperson in emailed statement on Wednesday.

“As a result of Visa’s /zigman2/quotes/203660239/composite V -1.98% continued high cost of payments, we regret that Amazon.co.uk will no longer accept UK-issued Visa credit cards as of 19 January, 2022,” the spokesperson said. The e-commerce giant will accept debit cards, including those from Visa, along with other cards not issued by the credit giant.

“With the rapidly changing payments landscape around the world, we will continue innovating on behalf of customers to add and promote faster, cheaper, and more inclusive payment options to our stores across the globe,” said Amazon.

In a separate statement, a Visa spokeperson said the company was “very disappointed that Amazon is threatening to restrict consumer choice in the future.

“When consumer choice is limited, nobody wins. We have a longstanding relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon U.K. without Amazon-imposed restrictions come January 2022,“ said the spokesperson in an emailed statement.

Separately, a Visa spokeswoman said the company’s fees remain “competitive.”

Visa shares were off more than 5% in morning trading Wednesday.

Baird analyst David Koning called Amazon’s move a “sentiment headwind” for Visa, though he doesn’t think it will have a “material” impact on the payments company’s financials.

“We think the UK in total is maybe around 6% to Visa revenue and Amazon a small part of that,” he wrote. “This is more of a risk if it spreads to other merchants, but we think unlikely.”

While Koning expected that many Amazon customers would switch to Visa debit cards after a Visa credit-card ban, he acknowledged that some might opt for credit cards branded by Mastercard Inc. /zigman2/quotes/207581792/composite MA -1.59% or American Express Co. /zigman2/quotes/203805826/composite AXP +0.12% instead.

Amazon has card partnerships with the other payments giant. Its site lists an Amazon Platinum Mastercard and an Amazon Business American Express Card.

This isn’t the first standoff between a merchant and Visa. Some Kroger Co. chains said they would stop accepting Visa cards in 2018 and 2019 before eventually reversing course.

“For perspective, in past years, Kroger and Walmart have tried this in North America, which represented bigger pockets of Visa’s revenue, though again was immaterial,” Koning wrote. “They eventually came back to accepting Visa credit cards.”

Barclays analyst Ramsey El-Assal wrote that Amazon’s move is “likely a negotiating tactic.” He also sees a “minimal” financial impact to Visa as he expects that the company’s credit business in the U.K. is “dwarfed by the network’s debit business.”

/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 2,890.88
+38.02 +1.33%
Volume: 7.78M
Jan. 24, 2022 4:00p
P/E Ratio
56.53
Dividend Yield
N/A
Market Cap
$1446.82 billion
Rev. per Employee
$352,824
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/zigman2/quotes/203660239/composite
US : U.S.: NYSE
$ 201.85
-4.08 -1.98%
Volume: 16.05M
Jan. 24, 2022 4:00p
P/E Ratio
36.78
Dividend Yield
0.74%
Market Cap
$433.74 billion
Rev. per Employee
$1.12M
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/zigman2/quotes/207581792/composite
US : U.S.: NYSE
$ 349.42
-5.66 -1.59%
Volume: 7.47M
Jan. 24, 2022 4:00p
P/E Ratio
42.97
Dividend Yield
0.56%
Market Cap
$348.89 billion
Rev. per Employee
$847,095
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/zigman2/quotes/203805826/composite
US : U.S.: NYSE
$ 158.93
+0.19 +0.12%
Volume: 5.40M
Jan. 24, 2022 4:02p
P/E Ratio
16.62
Dividend Yield
1.08%
Market Cap
$122.95 billion
Rev. per Employee
$643,124
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