Amazon may drop Visa as partner on US credit card

NEW YORK, Nov 18 (Reuters): Amazon.com Inc is considering dropping Visa as partner on its US co-branded credit card after earlier confirming it would stop accepting Visa credit cards in the United Kingdom as a dispute over payments intensified.

The e-commerce giant is in talks with several payment networks including Mastercard Inc, American Express Co and Visa as part of what it called its standard process for reviewing its co-branded credit card agreement, a spokesperson said.

Visa declined to comment on the co-branded card. Mastercard and American Express did not respond to requests for comment.

Earlier, shares of Visa closed 4.7 per cent lower after Amazon said it would stop taking payments from Visa credit cards in the UK from Jan. 19, 2022. In a statement, it said such charges should be "going down over time with technological advancements, but instead they continue to stay high or even rise."

In recent months, Amazon has introduced surcharges on customers using Visa credit cards in Singapore and Australia, citing high fees, as the relationship between the two firms deteriorated.

Since Britain's exit from the European Union, an EU-enforced cap on fees charged by card issuers is no longer in place in the UK, meaning providers are free to hike charges.

Visa last month began charging 1.5 per cent of the transaction value for credit card payments made online or over the phone between the UK and EU, and 1.15 per cent for debit card transactions, up from 0.3 per cent and 0.2 per cent, respectively.

The average credit card processing fees across the industry range between 1.5 per cent and 3.5 per cent of each transaction, according to analysts.

Historically, retailers had accepted processing charges by major credit card firms as the cost of access to their huge network of card users, analysts said, but that could be changing.

The move marks an "important turning point in the payments industry," said Laura Hoy, equity analyst at Hargreaves Lansdown, adding Amazon may hope to drive more customers to its own payments system.

"Ultimately, we think Amazon has the edge in this game of chicken - whether customers adopt its own payment system or Visa gives in and lowers its fees, either is a win for the retail giant," Hoy said.