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

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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.

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.

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%.

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 …..

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Comments (154)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Mr(s) Entitled says:
    17 Nov17 November 14:13

    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:
      17 Nov17 November 14:16

      that would cost them more than 1.2% card fee difference

      • Mr(s) Entitled says:
        17 Nov17 November 14:25

        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:
      17 Nov17 November 14:29

      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:
      17 Nov17 November 16:05

      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:
        18 Nov18 November 05:15

        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:
        18 Nov18 November 16:33

        Be careful what you wish for, BBB

      • Lady London says:
        18 Nov18 November 16:44

        +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:
    17 Nov17 November 14:15

    visa credit card is rare in the UK

    • Andrew says:
      17 Nov17 November 14:22

      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:
        18 Nov18 November 08:18

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

    • Can says:
      17 Nov17 November 14:23

      never even seen one

    • Paul Pogba says:
      17 Nov17 November 14:29

      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:
        17 Nov17 November 14:51

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

      • Chrism20 says:
        17 Nov17 November 21:03

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

      • Alex Sm says:
        18 Nov18 November 08:19

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

    • Andrew says:
      17 Nov17 November 14:56

      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:
      17 Nov17 November 15:20

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

    • Pete says:
      17 Nov17 November 17:25

      Well not really…unless you are being sarcastic

    • Michael Jennings says:
      17 Nov17 November 20:28

      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:
    17 Nov17 November 14:30

    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:
      17 Nov17 November 16:58

      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:
      18 Nov18 November 08:54

      There’s more than one Virgin Credit Card.

      Mine is worldwide fee free online and in person.

  • Will says:
    17 Nov17 November 14:32

    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:
      17 Nov17 November 14:43

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

    • Aeronaut says:
      17 Nov17 November 14:44

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

    • Rui N. says:
      17 Nov17 November 15:13

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

    • Char Char says:
      17 Nov17 November 15:45

      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:
      18 Nov18 November 05:17

      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:
    17 Nov17 November 14:41

    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:
    17 Nov17 November 14:44

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

  • Phil says:
    17 Nov17 November 14:49

    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:
    17 Nov17 November 14:56

    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:
      17 Nov17 November 15:32

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

      • Char Char says:
        17 Nov17 November 15:38

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

        • Ryan says:
          17 Nov17 November 15:51

          8% wilko always, 10% often at Boots

          Not hard if you look around

          • Rui N. says:
            17 Nov17 November 15:54

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

          • Dace says:
            17 Nov17 November 18:24

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

          • Char Char says:
            18 Nov18 November 00:59

            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:
        17 Nov17 November 15:53

        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:
        17 Nov17 November 15:56

        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:
          17 Nov17 November 16:42

          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:
            18 Nov18 November 01:05

            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:
            18 Nov18 November 10:52

            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:
            18 Nov18 November 11:04

            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:
            18 Nov18 November 12:45

            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:
            18 Nov18 November 13:48

            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:
            18 Nov18 November 14:54

            £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:
            18 Nov18 November 16:25

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

          • Lady London says:
            18 Nov18 November 16:51

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

    • Char Char says:
      17 Nov17 November 15:39

      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:
        17 Nov17 November 21:14

        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

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