This week, Amazon announced that it will stop accepting UK-issued Visa credit cards in 2022.

It said: “Starting 19 January 2022, we will unfortunately no longer accept Visa credit cards issued in the UK, due to the high fees Visa charges for processing credit card transactions.”

The announcement was initially only sent to customers who made a recent purchase from the online retailer.

Later, in a formal statement, a spokesperson for Amazon said: “The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers. These costs should be going down over time, with technological advancements, but, instead, they continue to stay high or even rise.

“As a result of Visa’s continued high cost of payments, we regret that will no longer accept UK-issued Visa credit cards as of 19 January 2022.”

It will, however, continue to accept Visa debit cards, as well as Mastercard (credit and debit cards) and American Express credit cards.

While Amazon hasn’t specified which fees in particular it finds problematic, it’s likely to be the interchange fees that merchants have to pay every time a customer makes a purchase using a credit or debit card.

Earlier this year, Visa announced that it was following Mastercard’s lead by increasing its interchange fee for web purchases. That increase took place in October.

Although Mastercard has the same interchange fee for online purchases, it’s protected by the fact that Amazon’s co-branded credit card is a Mastercard.

As I mentioned in a previous post, interchange fees can’t be passed directly onto consumers under EU law, which puts a bit of a squeeze on retailers.

It’s interesting to see Amazon push back on the fees; it’s the first major retailer to do so, and perhaps the only one big enough to make a difference.

In light of Amazon’s announcement, Visa has promised to work with the retailer to resolve the situation.

It said in a statement: “We have a longstanding relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions come January 2022.”

The solution they come up with could very well be the template for other retailers so I would be very interested to see what happens next.