Amazon sent a big shock wave through their UK customer base by blocking the use of Visa credit cards. This rule will come into force on January 19.
The online retailer recently claimed that their decision was heavily influenced by the “high fees Visa charge for processing credit card transactions”, and their stance was generally supported by others. Businesses across Britain have noted the rapid rise of card payments.
Businessman James Booth told City AM: “card fees are high, businesses are struggling to keep up and are being forced to pass down the cost to the consumer.”
Businesses like AmazOn will have to lose a portion of a transaction due to Visa. The higher the demand from Visa, the more likely the price of the product or service rises. Visa claim that they only take 0.1% of a purchase’s value, on average.
Early suggestions have indicated that Brexit played its part in the retailer’s decision, given that no such restrictions have been placed on countries in the European Union (EU). The dispute between Amazon and Visa is, of course, related to what the company charges for its services within the UK. Countries within the EU are not affected by Amazon’s decisions.
Business analyst, Steve Dresser, has claimed that this decision might be a negotiating tactic to lower the charge fee placed on Visa in their UK business setup. This could be of benefit to many UK businesses who have come under the cosh with the size of Visa transaction fees.
As noted, businesses across the UK are in agreement at the Visa charges on purchases with a Visa credit card. Whether or not other businesses will look to ban Visa credit cards is another story. Amazon is one of the biggest companies in the world and they can afford to talk tough with the financial services company. Smaller operators would struggle to take this stance because a lot of Britons pay for things using a Visa credit card.
What can you do?
A simple solution for anybody who is concerned with Amazon’s move would be to switch to a debit card. Debit cards take money directly from your bank account and you will not be expected to keep up with the payments that you rack up with credit card bills. Amazon do have an issue with Visa but they have ONLY banned credit cards with their service. Banning both debit and credit Visa cards would send the UK into an Armageddon scenario!
It is worth remembering that debit cards provide far less consumer protection than credit cards. If something goes wrong then it’s down to the purchaser as opposed to the company offering credit, which is why some people prefer the guarantee of credit card purchases.
Some options include:
- Mastercard credit and debit
- American Express
- UK-based Maestro
How to make £20!
Money-saving expert Martin Lewis has told Amazon customers that they could make £20 by making one simple fix, if they are eligible. Anybody who currently has an Amazon account and pays by Visa Credit could be entitled to some free cash if they switch to another form of payment before Amazon cancels Visa Credit.
Lewis said: “If Visa credit is your default method of payment at the moment, there’s a way to get Amazon to pay you.
“[Amazon] will give you £10, or £20 if you’re a Prime member.
“If you click the email link you’ve had about this or the homepage banner and you switch to a Visa debit, Amex, Mastercard credit or debit card you’ll get that money.”
However, apparently, this method only works if you switch to a card that isn’t already in your Amazon wallet.
All in all, it’s a big move from Amazon that is bound to have effects on a lot of UK consumers. While many UK businesses agree with the business behemoth, it is unlikely that they will be able to enforce bans on Visa because of the short-term effects that it could have on their business model.
Of course, disgruntled customers could look to buy at other online retailers as opposed to Amazon. However, clearly, CEO Jeff Bezos is banking on the efficiency of his company’s service to prevail over a few little obstacles.