# Analysis-Visa’s Amazon spat shows power is shifting to retailers in fee battle Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-11-22 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Amazon vs Visa: The Battle Over Payment Options Explored Meta Description: Discover how Amazon's dispute with Visa over high fees showcases the rise of alternative payment options in retail, impacting the card industry. URL: https://financedigest.com/analysis-visas-amazon-spat-shows-power-is-shifting-to-retailers-in-fee-battlehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-11-22t134858z1lynxmpehal0ohrtroptp4amazon-com-visa-1736837081927-compressed.jpg) By David Henry and Matt Scuffham NEW YORK (Reuters) – Amazon.com Inc’s latest spat with Visa shows big retailers, armed with a growing array of payment options, are gaining the upper hand in their power struggle with card providers, but it’s not a crisis for the payment company. Amazon said last week that it would stop accepting Visa credit cards issued in the United Kingdom from Jan. 19, 2022, saying that despite technology advancements the fees on such transactions remained high or in some cases were rising. While Amazon may yet back down on the UK front, where the company accounts for less than 1% of [Visa’s credit card](https://www.financedigest.com/visa-has-terminated-global-debit-card-agreements-with-ftx.html "Visa has terminated global debit card agreements with FTX") volume, according to an estimate by Piper Sandler analysts, the dispute is a bad sign for the card industry. Some analysts said it could presage a fight in the much bigger U.S. market. “Amazon is treating this dispute with Visa as an experiment,” said Piper Sandler analyst Christopher Donat. Our biggest concern is that [Amazon seeks](https://www.financedigest.com/amazon-loses-bid-to-throw-out-case-by-uk-drivers-seeking-worker-rights.html "Amazon loses bid to throw out case by UK drivers seeking worker rights") concessions from Visa in other geographies. Visa [Chief Financial Officer](https://www.financedigest.com/host-analytics-appoints-chris-labruna-as-chief-revenue-officer.html "Host Analytics Appoints Chris LaBruna as Chief Revenue Officer") Vasant Prabhu told Reuters in an interview on Friday that he expected a resolution. We’ve resolved these things in the [past and I believe we’ll resolve them in the future,”](https://www.financedigest.com/young-leaders-forum-jamal-edwards-on-the-past-present-and-future.html "Young Leaders Forum: Jamal Edwards on the past, present and future") he said. Amazon declined to comment. Credit cards dominated a third of North American ecommerce spending in 2020, according to payments giant WorldPay, but [mobile payment](https://www.financedigest.com/what-is-the-optimum-mobile-payment-mix.html "What is the optimum mobile payment mix?") options like Venmo and ‘buy now, pay later’ (BNPL) financing plans are chipping away at their market share. While alternative payments have been growing for years, the pandemic accelerated a downward trend in credit [card applications boosting](https://www.financedigest.com/festive-cheer-boosts-profit-outlook-for-uks-card-factory.html "Festive cheer boosts profit outlook for UK’s Card Factory") the popularity of BNPL financing, especially among younger consumers. Credit cards’ [share of North American e-commerce spending](https://www.financedigest.com/spending-drive-knocks-spotify-shares-after-q1-beat.html "Spending drive knocks Spotify shares after Q1 beat") declined 7% last year, according to WorldPay, while BNPL’s share increased 78%, making it the fastest-growing form of payment. In August, [Amazon partnered with BNPL provider Affirm to offer](https://www.financedigest.com/oracle-offers-its-mysql-heatwave-database-and-analytics-on-amazons-cloud.html "Oracle offers its MySQL HeatWave database and analytics on Amazon’s cloud") installment financing option on U.S. [Amazon purchases](https://www.financedigest.com/amazon-offers-shoppers-10-to-pick-up-purchases-as-it-targets-delivery-costs.html "Amazon offers shoppers to pick up purchases as it targets delivery costs"). Credit cards are still dominant players for non-cash transactions, but they need to be [aware of the growing](https://www.financedigest.com/demand-for-automotive-radiator-market-driven-by-shifting-consumer-perceptions-and-growing-awareness.html "Demand for Automotive Radiator Market Driven by Shifting Consumer Perceptions and Growing Awareness") competition,” Chris Dinga, payments analyst at GlobalData, wrote on Friday. BNPL is gradually being adopted by [retailers as they see higher conversion and growth opportunity](https://www.financedigest.com/uk-retail-banks-is-irrelevance-curtailing-opportunity.html "UK Retail Banks: Is Irrelevance Curtailing Opportunity?") by providing it to their customers,” Dinga wrote, adding high credit card fees could accelerate BNPL adoption by retailers. Some analysts said past disputes suggested Visa may have to blink before Amazon, such as when U.S. restaurant owners stopped taking Amex cards in the 1990s, leading Amex to [reduce its fees](https://www.financedigest.com/loveitcoverit-reduce-excess-fees-for-may-and-june.html "loveit coverit Reduce Excess Fees for May and June"). Visa may [need to follow American Express’s example,” Evercore analysts said in a research](https://www.financedigest.com/new-research-reveals-many-brits-turning-parents-financial-help-buying-many-need-helping-hand.html "New research reveals how many Brits are turning to their parents for financial help, what they are buying and why so many need a helping hand") note. ‘AGNOSTIC’ Still, Visa has survived such [fights and few other merchants have Amazon’s](https://www.financedigest.com/the-fight-by-microsoft-and-amazon-for-the-pentagons-cloud-contract.html "The fight by Microsoft and Amazon for the Pentagon’s cloud contract") heft, said Prabhu. Even a very large [retailer like Amazon](https://www.financedigest.com/amazon-other-retailers-revamp-free-shipping-as-costs-soar.html "Amazon, other retailers revamp ‘free’ shipping as costs soar") represents a relatively small portion of our payment volume,” he said. And [Visa is not wedded to credit cards as the primary transaction source](https://www.financedigest.com/brazil-to-resume-visa-requirements-for-us-japan-australia-canada-sources.html "Brazil to resume visa requirements for US, Japan, Australia, Canada -sources"), he added. If a merchant wants to [offer credit in a different way](https://www.financedigest.com/stepladder-squad-partner-offer-savers-new-way-boost-savings.html "StepLadder and Squad partner to offer savers a new way to boost savings"), we’re agnostic. We will do both. The buy now, [pay later](https://www.financedigest.com/the-pros-and-cons-of-buy-now-pay-later.html "The Pros and Cons of Buy Now Pay Later") business has been a positive for us. Visa has been [partnering with BNPL providers](https://www.financedigest.com/route-genie-partners-withnorsk-global-to-provide-retailers-with-increased-international-carriage-choice.html "Route Genie Partners WithNorsk Global To Provide Retailers With Increased International Carriage Choice"), including Sweden’s Klarna. Retailers also [benefit from credit](https://www.financedigest.com/benefits-of-a-good-credit-score.html "Benefits of a good credit score") card issuers offering their customers cash rebates and rewards programs to encourage them to spend more than they otherwise would. Prabhu said he expected credit [card spending to pick up now that borders are opening and affluent customers are spending more on travel](https://www.financedigest.com/virtual-cards-in-the-travel-industry.html "Virtual cards in the travel industry"), entertainment and eating out. And Amazon also [needs a partner](https://www.financedigest.com/when-you-need-an-it-partner-not-just-a-helpline.html "When you need an IT partner, not just a helpline") for its own co-branded credit card. The [company is considering](https://www.financedigest.com/should-your-company-be-considering-a-hybrid-cloud-strategy.html "Should your company be considering a hybrid-cloud strategy?") replacing Visa on U.S. co-branded credit cards with either Mastercard or [American Express](https://www.financedigest.com/american-express-and-rambus-join-forces-on-secure-global-e-commerce-tokenization.html "American Express and Rambus Join Forces on Secure Global E-commerce Tokenization"), suggesting its UK fee dispute could be a negotiating tactic, said analysts. It’s not necessarily a good idea for [merchants to restrict consumer](https://www.financedigest.com/epi-how-to-build-trust-and-adoption-among-consumers-and-merchants.html "EPI: How to build trust and adoption among consumers and merchants") choice,” said Prabhu. “Amazon will have to think about that, too.” (Editing Michelle Price and Nick Zieminski) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---