Sumary of Visa’s Amazon spat shows power is shifting in fee battle:
- Amazon announced last week that it would stop accepting Visa credit cards issued in the UK from January 19, 2022, saying that despite technology advancements, the fees on such transactions remained high or in some cases were rising.
- While Amazon may yet back down on the UK front, where the company accounts for less than 1 percent of Visa’s credit card volume, according to an estimate by Piper Sandler analysts, the dispute is a bad sign for the card industry.
- “Visa Chief Financial Officer Vasant Prabhu told Reuters in a recent interview that he expected a resolution.
- Credit cards dominated one-third of North American e-commerce spending in 2020, according to payments giant WorldPay, but mobile payment options like Venmo and ‘buy now, pay later’ (BNPL) financing plans are chipping away at their market share.
- Credit cards’ share of North American e-commerce spending declined 7 percent last year, according to WorldPay, while BNPL’s share increased 78 percent, making it the fastest-growing form of payment.
- “Credit cards are still dominant players for non-cash transactions, but they need to be aware of the growing competition,” Chris Dinga, payments analyst at GlobalData, wrote.
- Some analysts said past disputes suggested Visa may have to blink before Amazon, such as when US restaurant owners stopped taking Amex cards in the 1990s, leading Amex to reduce its fees.
- “Visa may need to follow American Express’ example,” Evercore analysts said in a research note.