Amazon to continue accepting Visa credit cards in UK, drops its earlier plan

• It’s not yet clear why Amazon retreated from its plan nor whether the decision is final or temporary

• Many think Amazon to get some bargaining power over Visa to lower its fees

Amazon.com Inc (NASDAQ: AMZN), on Monday, said it has scrapped its plans and will accept Visa Inc's (NYSE: V) credit cards for UK payments, as the two companies seek to resolve a dispute.

Last November, the e-commerce giant announced it would stop accepting payments from Visa-issued credit cards in the UK from January 19, blaming the payment giant is charging high processing fees.

However, in an unexpected turn of events, Amazon said the change “will no longer take place.”

“We are working closely with Visa on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk,” the online retailer said.

In a brief statement, Visa also said they are working closely together to reach an agreement.

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Although it is not yet clear why Amazon made the U-turn on its plan nor whether the decision is final or temporary, the e-commerce giant, in an email to customers, said, “Should we make any changes related to Visa credit cards, we will give you advance notice.”

Cost hike

Earlier this year, the U.S. payment giant hiked the interchange fees it charges merchants for processing transactions between the UK and the European Union. However, after Brexit, the EU put a cap on interchange fees, which no longer applies in the UK, allowing card networks to raise their charges.

Since November, Amazon had been luring its customers from Britain to use Visa debit cards and non-Visa credit cards like Mastercard and American Express and offered some of the affected customers a 20 British pounds ($26.86) discount in purchase to encourage them to update their payment method to other credit card or a Visa debit card.

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Visa, at that time, said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.”

Last week, British lawmakers said they are planning to scrutinize the rise in the processing fees Visa and Mastercard Inc (NYSE: MA) charge businesses after the country’s payments regulator found no evidence that justifies the increase.

Picture Credit: BBC