Amazon and Visa today officially ended their spat over the card company’s fees paid by U.K. credit consumers, a disagreement that had threatened to spill over to the U.S. and other markets.
The e-commerce giant also announced that it dropped a surcharge on Visa charge accounts in Australia and Singapore imposed last year.
Both companies hinted that a deal was in the works last month, when Amazon backed down on a threat to quit accepting Visa charge cards that originated in the U.K. on Jan. 19. Wall Street analysts argued Amazon was using the U.K. fee dispute as a negotiating tactic to squeeze more concessions from San Francisco-based Visa.
Financial details weren’t disclosed, although the deal has ramifications beyond the U.K. as both companies described the agreement as “global” in nature.
According to a Visa spokesperson, the agreement includes the acceptance of Visa cards at all Amazon sites and stores “as well as a joint commitment to collaboration on new product and technology initiatives to ensure innovative payment experiences for our customers in the future.” An Amazon spokesperson added that the company “remains committed to offering customers a payment experience that is convenient and offers choice.”
Increases in fees levied by card companies on merchants have been a sore subject for years, particularly so-called swipe fees imposed after each transaction.
Swipe fees on Visa credit cards totaled $43.5 billion in the United States in 2020, more than 100 times the amount collected in the U.K., according to CMSPI data cited by the Merchants Payments Coalition. Moreover, Visa’s 2.22% average swipe fee in the U.S. is four times higher than the U.K. rate of 0.55% of the transaction, according to the MPC.
“Lawmakers and federal regulators have been taking a close look at the fees,” the trade group said. “Visa and Mastercard last year postponed $1.2 billion in fee increases following concern from Congress but said the increases would take effect this April. The Federal Reserve has proposed regulations clarifying that banks must enable all debit card transactions to be processed over at least two unaffiliated networks — including at least one competing network such as NYCE, Star or Shazam — rather than just Visa or Mastercard’s networks.”
In response to the news, the MPC said U.S. authorities should take note of the Amazon-Visa dispute in the U.K. “and realize that many retailers here feel the same. It’s time to bring about competition that will require the card industry to play under the same rules as other business.”
