Amazon kicking out Visa credit cards over charges: Is this Thanos vs Magneto with consumers in the middle?

The British Retail Consortium says its members are paying through the nose to an industry that needs tighter regulation, writes James Moore

Visa not welcome? From mid-January Amazon will no longer accept its cards (PA)

Who are the goodies and who are the baddies when it comes to Amazon’s row with Visa? Or are they both just baddies – a corporate Thanos vs Magneto with the poor consumer stuck in the middle brandishing a useless credit card?

Help! Where are the X-Men or the Avengers when you need them?

But first to the background. Amazon customers – including this one – have been emailed with warnings that their Visa credit cards will be no good from the middle of January 2022.

Sure, consumers will be able to use Visa debit cards, or alternatives such as Mastercard, Amex, or Eurocard. But the move still reduces their choice and creates inconvenience by forcing them to switch from what may be their preferred method of payment. Boo Amazon!

But wait, says Amazon: we’re not the villains here. We’re doing this because of “the high fees Visa charges for processing credit-card transactions” in the UK. Higher fees mean higher costs mean higher prices for the consumer.

And there’s more: “We’ll give you £20 off your next purchase the first time you set any debit or non-Visa credit card as default.”

The twenty is subject to terms and conditions, set out at the end of the email. As you might have guessed, they are almost illegible without the aid of a magnifying glass or a superhero’s super-sight, and getting hold of the money is quite fiddly. But it’s still free money! So yay Amazon?

Actually, the retailer is not wrong to raise the issue of interchange fees charged by payment companies. It’s an industry-wide problem. It’s one that ought to be getting more attention because, as the company rightly points out, technology really ought to be bringing costs down.

While there’s no information on how much the charges might be from either side, it’s clear that this row wouldn’t be happening if they were coming down.

So does this make Amazon the consumer’s Avenger?

Well, hold your horses. Perhaps we should point out here that Amazon offers a credit card. It’s with Mastercard. Other companies have taken shots at Mastercard over its fees.

Best leave the Quinjet in its hangar at Avengers Mansion, then.

This row will get sorted out – I’m guessing in Amazon’s favour – because Visa stands to lose a lot of business if it doesn’t. Amazon, by contrast, might not sacrifice much, if any.

Companies with clout can create this sort of fuss to get a better deal. Companies without it can’t.

But while Amazon’s no consumer Avenger, nor is it a Thanos in this case, because it might have done us all a solid by highlighting the issue.

The digital payments industry is huge. It has been given a big shot in the arm by the pandemic. And it has pricing power, particularly when it comes to smaller companies, which are often left spitting tacks at the charges it imposes on them.

While Amazon and Visa say Brexit hasn’t played a role in their spat, the British Retail Consortium (BRC) has complained that retailers face soaring cross-border processing costs in its wake. It places them at up to £150m in the UK and the European Economic Area, with UK retailers on the hook for £36.5m. About £100,000 a day. There is really no excuse for that.

The consumer’s heroes here really ought to be Britain’s regulators, but they seem to have left their powers at home.

The BRC noted that the Payment Systems Regulator has been rumbling. “The absence of specific regulatory caps is not itself sufficient reason to increase particular fees, particularly if these increases are not obviously linked to costs. Such pricing behaviour poses real questions about how well this market is working,” said its boss at the PayExpo shindig.

That could be interpreted as a shot across the industry’s bows. But a shot isn’t enough. What’s needed is one of Iron Man’s repulsor blasts, perhaps one backed by government power.