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Visa navigate the Amazon

27 January 2022. Published by Ellie Chakarto, Associate

Amazon recently halted its decision to stop accepting Visa credit card payments for UK customers on January 19th. The decision to prohibit the use of Visa credit cards was initially enacted due to a dispute that arose over payment fees levied by card issuers.

The EU enforces limits on these fees, but the UK allowed card issuers to raise them upon leaving the EU. Visa (amongst others) took advantage of this opportunity to raise the interchange fees from 0.3% to 1.5%, causing issues for many retailers, including Amazon. 

Despite deciding not to ban visa credit cards, they have not abandoned the prospect of a future ban. 

This high profile disagreement highlights issues which affect the industry as a whole.  Specifically in relation to interchange fees, the Treasury Select Committee (the Committee) recently opened an inquiry with the Payment Systems Regulator (PSR) in respect of such fees in response to pressure from retailers generally (see here for more information). 

The Committee appears concerned by the increased costs pressures on retailers and the impact of volatile trading conditions brought about by Covid and other macro issues.

In an encouraging sign for retailers and consumers, the Committee intends to question the PSR on what it is doing to protect consumers and businesses from rising prices (of which interchange fees are a contributing factor – for example these fees more than doubled between 2014 and 2018).  The session is slated for March and we will update you further following the PSR's evidence and the Committee's findings.