Maximise your Avios, air miles and hotel points

This is why Amazon won’t accept Visa credit cards from January

Links on Head for Points may pay us an affiliate commission. A list of partners is here.

If you have an Amazon account in the UK, it is very likely that you received an email from the company today saying that it will not accept Visa credit cards from January 2022.

There is some confusion and misreporting about what Amazon is doing so I thought it was worth running over.

The key thing to understand is that this is a one-off dispute. For very specific reasons, it is not the start of a war between large retailers and the credit card companies.

Why is Amazon dropping Visa cards in the UK

Both Amazon and Visa have not been entirely truthful when they told the media that this is not about Brexit, because it absolutely is.

Here is wording from the email sent by Amazon:

“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. You can still use debit cards (including Visa debit cards) and non-Visa credit cards like Mastercard, Amex, and Eurocard to make purchases. Please update your default payment method now, or add one of these new, eligible payment methods if you do not have one.”

What has happened to credit card fees charged to retailers post-Brexit?

Post Brexit, credit card fees have not changed for 99.9% of transactions:

  • a purchase from a UK retailer incurs an interchange fee of 0.3%, which is the same as it did whilst we were still part of the EU – this is because the EU legislation on interchange fees was incorporated into UK law, along with all other EU legislation
  • a purchase you make outside the EU in-person is not covered by any interchange capping legislation (subject to local rules) but this was also the case pre-Brexit

Once we left the EU, however, there was one loophole for Visa and Mastercard to exploit.

Why is Amazon dropping Visa cards in the UK

The EU rules only applied to IN-PERSON transactions. EU legislation does not cap interchange fees for online transactions, and UK legislation only covers transactions (online or in person) between two UK companies.

Card fees on purchases made by UK residents from EU companies ONLINE are not capped.

Unsurprisingly, both Visa and Mastercard announced substantial (500%) increases in interchange fees for online transactions that you make in the EU.

The fee on credit card payments rose from 0.3% to 1.5% and the fee on debit card payments increased from 0.2% to 1.15%.

In theory this isn’t a big deal ….

On the face of it, this should be a niche problem.

How much do you buy online from companies in the EU for delivery to the UK? Probably not much, if anything.

However ….

If you buy something from Amazon UK, you are actually buying something from Amazon Europe Core SARL or a related company. This is based at 38 avenue John F. Kennedy, L-1855 Luxembourg.

If you have a credit card which gives bonus points for overseas purchases, you may have received bonus points on your Amazon spending in the past – even though you were charged in Sterling and the goods were delivered from the UK. This is because the payment was processed in Luxembourg.

Visa is presumably treating purchases made at Amazon UK as if they were online transactions made in the EU. The interchange fee would therefore be 1.5% instead of 0.3%.

This is why Amazon won't accept Visa credit cards from January

Why isn’t Mastercard impacted?

There appear to be two options:

  • Mastercard has reached an agreement with Amazon over fees, or

American Express is not part of this fight because it has not attempted to increase fee for UK customers making online EU transactions.

I like my Visa card. Is there a workaround for this?

Yes.

If you get a free Curve card – which is a Mastercard – you could use it to make your Amazon purchases from January 2022.

Curve recharges your purchases to another linked Visa or Mastercard. Link your existing Visa card to it and you’re sorted – Amazon charges will continue to pass through to it, via Curve.

You can apply for a free Curve card here. You will get £10 for signing up if you use our link.

You can also, of course, buy Amazon gift cards at other retailers with your Visa card and add them to your Amazon account.

Will Visa and Amazon reach an agreement?

It’s possible, of course, although the damage may have been done following the email today.

If customers swap to a Visa debit card – which is likely if they have a debit card from the same bank that issues their Visa credit card – then the hurt to Visa is limited. If a customer chooses to drop their Visa credit card entirely and switch to a Mastercard credit card, the damage could be far greater.

PS. Whilst writing this article, I noticed that Amazon is currently offering a £40 gift card if you sign up for the free Amazon Platinum Mastercard …..


Want to earn more points from credit cards? – January 2022 update

If you are looking to apply for a new credit or charge card, here are our January 2022 recommendations based on the current sign-up bonus

You can see our full directory of all UK cards which earn airline or hotel points here. Here are the top current deals.

There are special sign-up bonuses on both of the BA American Express cards until 28th February 2022. The bonus on the free card is doubled to 10,000 Avios and the bonus on the Premium Plus card is increased from 25,000 Avios to a huge 40,000 Avios.

British Airways BA Amex American Express card

British Airways American Express

10,000 Avios for signing up (SPECIAL OFFER) and an Economy 2-4-1 voucher for spending ….. Read our full review

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

40,000 Avios (SPECIAL OFFER) and the UK’s most valuable card perk – the 2-4-1 voucher Read our full review

Nectar American Express

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

American Express Platinum card Amex

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Earning miles and points from small business cards

If you are a sole trader or run a small company, you may also want to check out these offers.

The bonus on the Capital On Tap card is increased from points worth 10,000 Avios to 30,000 Avios until 4th February 2022.

The bonus on the British Airways Accelerating Business card is increased from 30,000 Avios to 45,000 Avios until 28th February 2022.

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

45,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Capital on Tap Visa card

Capital On Tap Business Rewards Visa

30,000 points bonus – the most generous Avios Visa for a limited company Read our full review

For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.

Apply 31st March 2022 and your cashback will be increased to 2% for the first three months.

Barclaycard Select Cashback credit card

1% cashback (2% for your first 3 months) and no annual fee Read our full review

Comments (156)

  • Mr(s) Entitled says:

    Amazon could solve this problem by ‘moving’ their business to the UK. I wonder if the payment of tax would offset the Visa fee?

    • Nigerian Prince says:

      that would cost them more than 1.2% card fee difference

      • Mr(s) Entitled says:

        I do hope they get the irony of the credit card issuers being able to take advanatage of cross border activity for their own end. Not like Amazon (or many other companies) have whole departments dedicated to do just the same.

    • Rhys says:

      Quite. Amazon wants to have its cake and eat it – ie. be domiciled in Luxembourg but also not be charged higher interchange fees. Time they paid up!

    • BuildBackBetter says:

      This is why I think UK government should fix the rate at 5%. Will force Amazon and Apple to move accounting revenues to UK.

      • patrick C says:

        Well maybe the EU should just impose EU headquarters for all companies, then london will get emptied out fast…
        (This will be happening over time though)
        Amazon simply uses their market power to teach a lesson to the visa monopolist.
        Quite nicely done actually given that this won’t impact their revenue…

      • Lady London says:

        Be careful what you wish for, BBB

      • Lady London says:

        +100

        Wouldn’t it be fun if the UK government asks Amazon to explain their decision given that Amazon is both selling and delivering to UK residents so surely the transactions concerned are transactions subject to UK tax. they certainly are subject to UK VAT as the consumer recipient is in the UK. So why is an HMRC argument not succeeding that the corporate profits from UK transactions are also taxable by the UK.

        Sounds like the VAT rate on any transaction not processed by an entity subject to UK corporate tax needs to be a specially surcharged VAT rate.

  • Nigerian Prince says:

    visa credit card is rare in the UK

    • Andrew says:

      Even debit cards increasingly. Out of my whole collection the only visa card I have is a single debit card from Lloyds

      • Alex Sm says:

        MBNA horizon cards are Visas, Barclaycard are Visas, HSBC are Visas – what rarity are you talking about?

    • Can says:

      never even seen one

    • Paul Pogba says:

      My MBNA Horizon card is Visa so I imagine all Lloyds cards will be, as are Nationwide. Barclaycard with 10m cardholders also seem to use Visa.

      • Spurs drive me mad says:

        My first direct visa debit changed to a MasterCard debit few weeks ago.

      • Chrism20 says:

        With Bank of Scotland (LBG) my DC is Visa but my CC is MasterCard.

      • Alex Sm says:

        Exactly – people seem to live in the imaginary world where MasterCard buys them everything

    • Andrew says:

      Are you sure?

      My MBNA Card is a Visa Card, as is My BoS card – both LBG.
      First Direct switched their debit cards to Mastercard, but my FD Credit Card is still a Visa
      And, of course, the Grandaddy of them all, my Barclaycard is a Visa Card – who have more than a quarter of the UK credit card market.

    • Jonathan says:

      Not for the people using Barclaycard or Nationwide credit cards it isn’t

    • Pete says:

      Well not really…unless you are being sarcastic

    • Michael Jennings says:

      A quick check of the credit cards in my wallet and I have five Visa (one from MBNA, two from Barclaycard, one from HSBC and one from Jaja), two Mastercard (Halifax and Amazon/Newday), and two Amex. I have three debit cards (Barclays, Halifax, and Nationwide) all of which are Visa, and a Curve card, which pretends to be Mastercard debit. So Visa credit doesn’t seem that rare to me.

  • Rich says:

    Slightly OT but I’m a bit baffled about the Virgiin Credit Card and € transactions.

    I remember reading that officially only in-person transactions are fee-free, but in practice, online transactions are too. Is that still the case?

    According to XE credit card calculator, I’ve paid 0.93% load, which seems to be somewhere in between

    • PJJ says:

      I bought some tickets a month ago which were priced in Euros
      Paid with my Virgin Plus Credit Card and no charge was shown

    • Andrew says:

      There’s more than one Virgin Credit Card.

      Mine is worldwide fee free online and in person.

  • Will says:

    Amazon shipping in the U.K. provide pick ups from U.K. addresses and delivery to U.K. addresses. It’s wholly done in the U.K.

    Yet they issue invoices without VAT from Luxembourg.

    I’ve never been able to figure that one out and neither has my accountant.

    • Rob says:

      All payments we get from sales of UK goods to UK residents via our links on HfP comes from Luxembourg.

    • Aeronaut says:

      Your accountant might not have figured out out, but Amazon’s tax sidestepping corporate accountants have…

    • Rui N. says:

      You need to find a better accountant. Multinational companies are not exactly a new thing.

    • Char Char says:

      They must be classifying the delivery services under an EU VAT registered company and if you are VAT registered in the UK they remove it, if you aren’t then they would probably add it on.

    • patrick C says:

      No vat impact. Just that their european headquarters are in luxembourg. (Emloying c. 4k people just in corporate services).
      It’s similar to me buying something from unilever on the continent, ultimately headquartered in the uk…

  • Aeronaut says:

    Thanks Rob for confirming my – and I suspect many others – suspicions that this was down to the Brexit-related change in card interchange rates, and Amazon processing translations in Luxembourg.

    I imagine one solution that will be proposed by some (from both left and right sides of the aisle) will be that Amazon UK should process payments for transactions in the UK. But then Amazon would have to start thinking about paying a higher (and fairer) share of tax…

  • Asim says:

    Really good article.
    None of the mainstream media is explaining this properly!

  • Phil says:

    I don’t think I’ve ever had a Visa credit card, only debit cards. I always use Amex and if it’s not accepted then a Mastercard.

  • Heran says:

    Another workaround is to buy Amazon giftcards from other shops that accept Visa credit, such as Wilko. If you use Airtime you can also get 3% reward.

    • Ryan says:

      Or Mozzer’s at 20%+ off recently
      Only a fool pays full price at amazon (or anything less than 10% off)

      • Char Char says:

        Yeah thats fine for one off promotions but not something you can rely on if spending any great amount.

        • Ryan says:

          8% wilko always, 10% often at Boots

          Not hard if you look around

          • Rui N. says:

            None of the Boots around here have Amazon gift cards. Such a fool!

          • Dace says:

            Sorry, just came across this. How do you regularly get those sort of discounts for Wilko and Boots?

          • Char Char says:

            4.5% Wilko and boots is 5% on airtime although never seen amazon vouchers at boots. Not sure where your getting the higher rates if it’s bank offers then they are likely one off so not exactly a long term solution. Yes you can easily buy small amounts with these one off offers but not high amounts. Have you actually purchased amazon at boots and where are the offers you mention?

      • Rui N. says:

        Yes, only a fool lives in places without a Morrison’s and doesn’t have a supported Airtime contract. Perhaps the fool is someone that doesn’t save money on the phone contract and then has to drive around to get discounts?

      • Rui N. says:

        These bubbles that some people live in are amazing. Amazon is widely seen as the most difficult retailer to get discounted gift cards (as you have to get intermediate promotions to get a hold on them, while for most retailers they are discounted everywhere). Some people think that just because they find a way that works for them (and good for them), that anyone that doesn’t have access to it is a fool.

        • Ryan says:

          Actually, if you’re smart and already saving money on the contract (£13 a month rolling for 30GB) and when you build up a credit balance , request a cash refund… then I’m not sure I’m the foolish one!

          I often hit the £100 a month AR limit and have a nice bank transfer every few months

          Very easy to set yourself up with AR and a cheap contract, not sure what the upset is all about

          • Char Char says:

            It’s not easy to get discounted amazon vouchers, never seen more than 4.5% for wilko which again doesn’t always track.

          • Rui N. says:

            Exactly Char Char. In fact, every time a new Morrison offer comes on Amex, a lot of people say here that these offers are great because they are the only opportunity they have to buy Amazon GCs with a discount. To have someone come here and say that anyone that doesn’t get at least 10% off in all Amazon purchases is not really knowing anything outside their bubble.
            (Ryan, I pay £6 for 8GB – it’s rare that I use more than 3 of those GB -, I’m already £7 ahead of you every month…)

          • Char Char says:

            Yes exactly, that 10% off is a rare occasion and not something that is common, if it was I’d be doing it

          • Ryan says:

            Rui, I won’t divulge all the secrets here. Flexibility of Morrison’s cards means you should never be in a position of not being able to convert to Amazon if needed.
            Morrison’s 10-20% off has been running roughly every 6 months so a bit of simple planning would negate any issues (we spent £10k+ on various last time). Vouchers available online through a subscription shop.

            Great, you only spend £6 but how much would it cost if you needed more? You’re not up £7 because you don’t get as much… you’re paying £0.75 per GB vs my £0.43; depends how you look at it but imo you can’t get better than that…

          • Rui N. says:

            You don’t seem to be able to grasp that not everyone has access to a Morrisson’s. I you do realise that floating £10k worth of gift card is not possible for everyone but a tiny minority of people, right? I know, fool of them for being poor.

            On the cell phone bill, no, wrong numbers. I’m paying £2-3 per GB on most months as I don’t use all my allowance (conveniently PlusNet start giving much better deals after lockdowns started; before lockdown I was at the same £6 for only 2GB, but they kept adding better deals as people didn’t use as much data).
            You might try to spin your higher price every way you want to try to convince yourself that you are paying “less” but at the end of this month I’ll pay £6 and you’ll pay £13.

          • Ryan says:

            £2-3 per GB is even worse!

            If I had a family of 4 and paid £200 a month on food, I would consider that to be a better deal than you if you pay £100 living on your own (assuming we’re all happily fed etc)

            Because I use a lot more GB – often to earn income, I completely value £7 a month more. False economy if you go over just once

          • Char Char says:

            Not sure what this conversation has evolved to but I pay £10 for 100gb a month now

          • Lady London says:

            You’re paying £13 a month for 30Gb? You need to look again. You could do a lot better.

    • Char Char says:

      Never had Wilko tracked but Asda is good for 2% if you don’t have a work place scheme for the Morrisons or Tesco vouchers.

      Tesco is on Airtime but again doesn’t seem to track for me

      • Chrism20 says:

        Have you tried removing the card and re-adding it? I always had trouble with Boots on one of my debit cards and that seemed to solve the issue

The UK's biggest frequent flyer website uses cookies, which you can block via your browser settings. Continuing implies your consent to this policy. Our privacy policy is here.