What does Amazon’s ban of Visa Credit Cards mean for UK consumers?

What’s happening?

If you are an Amazon customer with a UK Visa credit card linked to your Amazon account, you may have woken up on Wednesday 17th November 2021 to a rather surprising email. Amazon informed its customers that it will be blocking the use of UK Visa credit cards on its platform from 19 January 2022.

The BBC has reported that Amazon is also offering £20 for Prime customers to switch away from Visa to an alternative payment method, and £10 for other customers.

Visa card scheme credit cards are used by a number of the UK’s largest credit card providers, including Barclaycard and HSBC. This ban is likely to be disappointing news to customers of those banks who do not currently have an alternative credit card on the Mastercard or American Express card schemes to use online at Amazon.

The ban does not apply to Visa debit cards which will still be accepted on the Amazon platform.

Why is the change happening?

Amazon has blamed the change in its card acceptance policy on the increasing cost of payment processing fees charged by Visa, claiming Visa’s fees are excessive and an obstacle to low prices for consumers.

In response, Visa has claimed that its charges are competitive, have a minimal effect on prices and that nobody wins when choice is restricted.

Are there any legal implications for consumers?

If you currently have a UK Visa credit card registered on Amazon, and do not have an alternative Mastercard or American Express credit card to replace it with from 19 January 2022 onwards, you will likely be forced to update your payment card to your bank debit card or stop using Amazon altogether.

From a legal perspective, switching from a credit card to a debit card means large purchases over £100 on Amazon will no longer benefit from protection under section 75 of the Consumer Credit Act 1974. Section 75 protection means your credit card provider must take the same responsibility as the retailer if things go wrong for any purchases between £100 and £30,000. If the goods fail to arrive, or the merchant goes bust, you are protected by your credit card provider up to the full value of the purchase.

Are there any competition issues?

This is a more difficult question to answer. Amazon has blamed the decision on commercial considerations (i.e. increased fees), which could well be above board and fair. However, some may look at the fact that Amazon has its own UK credit card which operates on the Mastercard card scheme and the reports that it is actively incentivising customers to use payment methods other than Visa as evidence that it is unfairly “favouring its own”.

Will the ban actually come into effect?

It is possible that this very public commercial dispute will blow over if the two sides can agree some form of settlement prior to the 19 January 2022 start date. The choice of the January date is an interesting one as it falls at the end of the busiest period of the year for UK credit card spend as consumers make Christmas and New Year purchases.

For the time being, Amazon customers with Visa credit cards will be along for the ride as they await developments with interest.