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 AMZN,
“As a result of Visa’s V,
“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 3% in premarket 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. MA,
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.”
