Reply To: Will Amazon continue accepting Visa credit cards?

[Andrew Spencer]

I found this story interesting because a hard block on Visa credit payments appears terrible for both parties. I read that Amazon could lose £1.4 billion, or around 10% of its UK revenues from the move. Importantly, one of Amazon’s biggest draws is convenience, and forcing customers to change their payment methods could also cause them to use unrestricted alternatives like eBay for quick purchases in the short term.

Equally, though, it’s clear that Visa would be losing a significant portion of revenue from the move. Surely it might put it in perspective that reducing their processing fees would be worth it to prevent losing revenue from one of the world’s biggest companies?

Ultimately, I think, as it said in today’s edition, it’s a game of corporate chicken where both companies hope to find a long-term resolution. Unless Amazon demands lower and lower processing fees to the extent that it’s no longer profitable for Visa, I can’t see either company refusing to compromise, given the vast sums at stake. I think it’s also worth noting that Amazon might have hoped the move would drive customers to use their Amazon’s own credit cards, but it seems to have backfired for now, given they caved at the last minute.