Amazon threatens Visa and Mastercard credit card dominance


Dungan Barrigan, chief product officer of GoCardless, which develops technology to help businesses avoid card payments, said Amazon’s move “is part of a move away from the duopoly, from card payments and toward payments. more direct that eliminate intermediaries “.

The Visa and Mastercard networks facilitate money transfers between banks and merchants, verifying them against fraud or failure. The charge, normally around 0.2pc for debit and 0.3pc for credit, goes to the card provider or the bank, and 0.1pc is debited by Visa or Mastercard.

For some payments, this is even higher, with “interchange” fees for those between the UK and the EU on Visa and Mastercard increased to 1.5 pc last October, after Brexit. Retailers have long been frustrated with these costs.

“With retailers now spending over £ 1 billion to accept card payments, it’s no surprise that many are frustrated by these rising fees,” says Andrew Cregan, payments policy adviser at the British Retail Consortium. “Ultimately, it will be consumers who will suffer the higher prices unless these spiraling costs can be brought under control.”

While AmEx faced competition from competing card networks promising lower fees, Visa and Mastercard now face new forms of credit and money transfer and giant retailers, such as Amazon, with a significant leverage effect. Amazon has already added surcharges to Visa purchases in Singapore and Australia, citing rising costs.

“The cost of accepting card payments continues to be a barrier for businesses striving to offer customers the best prices,” an Amazon spokesperson said. “These costs are expected to come down over time with advancements in technology, but instead they continue to stay high or even increase.”

With a market capitalization of nearly $ 2 trillion, Amazon could lend weight to similar protests from other retailers. Rivals Kroger and Walmart have both already banned Visa credit cards to force them to get better deals. Amazon will, however, continue to accept Mastercard credit cards in Great Britain, which outnumber Visa’s credit arm in the United Kingdom.

Meanwhile, the growing popularity of BNPL apps, which break purchases down into three or four pieces, could prevent consumers from using traditional credit card infrastructure and rewards offered by banks. Amazon worked with the BNPL Affirm company.

These businesses charge merchants their own fees but can avoid certain card processing fees, and in some cases all Visa or Mastercard fees, since consumers can repay their BNPL credit by wire transfer.


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