In a disagreement over payment rates, Amazon seems to have backed down from a public warning to stop supporting Visa payments in the UK.
The ecommerce behemoth issued an email to Amazon.co.uk consumers today alerting them that the “anticipated change” that was supposed to happen on January 19 has been postponed.
But it is unclear if the two corporations have reached a long-term agreement on fees.
“On January 19, the anticipated change governing the usage of Visa credit cards Now.co.uk will no longer be implemented.” In an email sent to UK customers, Amazon states, “We are working closely with Visa on a possible solution that would allow consumers to continue using their Visa credit cards Now.co.uk.”
“We will provide you early notice if we make any changes pertaining to Visa credit cards,” it continues, adding, “Until then, you may continue to use Visa credit cards, debit cards, Mastercard, American Express, and Eurocard as you do now.”
When contacted for comment, Amazon and Visa both verified the news – but provided no other information.
Amazon refused to comment more than its short message to users that nothing is changing for the time being.
While a Visa spokesperson did not elaborate on what “potential solutions” might mean in practise, it did say in a statement that “Amazon customers can continue to use Visa cards Now.co.uk after January 19 while we work closely together to reach an agreement,” implying that fee negotiations are still ongoing.
Late last year, Amazon sent an email to UK consumers blaming high payment costs levied by Visa for credit card transactions for terminating support for Visa payments, advising Brits to make alternate arrangements for paying for their Amazon.co.uk purchases.
Its widely circulated mass email seemed to be an effort to use its market strength to wrest better terms from Visa.
It’s unclear if this was enough to persuade Visa to lower its credit card costs, or whether Amazon just chose to pull back from the verge of causing huge inconvenience to UK buyers.
If the latter is true, Amazon has already given Visa-based payment method consumers in the UK months of anxiety about whether they would be able to make purchases on the site in the near future.
Visa has previously expressed disappointment that Amazon “is threatening to restrict customer choice in the future,” stating that “when consumer choice is constrained, nobody benefits.”
Visa had said at the time that it was working with Amazon to find a solution that would allow Visa cardholders to continue using their Visa credit cards issued in the United Kingdom Now’s website.
Months later, it seems that conversations are still ongoing — but without the threat of a public deadline for Amazon to cease taking UK-issued Visa cards.
The UK’s withdrawal from the European Union has been connected to rising Visa transaction costs Now.co.uk, since Brexit removed the ceiling on fees that may be levied on transactions between the UK and the European Economic Area/EU.
However, the problem is likely to be related to the details of Amazon’s UK business structure, since the company invoices UK clients via an EU-based organisation, transferring money from its UK website to its European headquarters in Luxembourg.
According to a study published by City AM in August, Amazon’s business structure allowed them to avoid paying much greater amounts in UK tax. However, it seems that the same ‘earnings shifting’ system costs Amazon far more in Visa ‘taxes’ than it would prefer to pay.
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