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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.

  • Geoff Reed says:
    18 Nov18 November 09:41

    The use of a credit card linked to a Curve Card should come with a health warning. Those of us who followed the Head for Points promoted use of the IHG Rewards Card linked to Curve are now suffering from the lost of their cards, free hotel night vouchers earned, annual fee paid and IHG points earned in the last two months. Link a Curve Card to any Creation issued card at your peril.

    • Ian says:
      18 Nov18 November 10:12

      That’s a bit rich Geoff, you knew exactly what you were doing I reckon.

      Your beef should be with IHG, not Head for Points.

      • Sam says:
        18 Nov18 November 10:30

        IHG or Creation? Def not HFP. We’re (mainly) grown ups here! :p

      • Algor says:
        18 Nov18 November 10:33

        And some of us moved 7 figures using bendy through Sandi and still have the underlying IHG card not cancelled, earning points every month as usual.

        YMMW

        • Rui N. says:
          18 Nov18 November 10:44

          Now, you are a luck fellow Algor. Who did you bribe at Creation to get under the radar?

      • Geoff says:
        18 Nov18 November 10:46

        Ian, Yes, I did know exactly what I was doing – unlike some others I did not use my Curve Card linked to IHG for any ‘cash’ transactions. Even though this was put forward as an option on Head For Points. My IHG card linked to Curve was solely for no more than 25 retail transactions (mostly Sainsbury’s) to try out the Curve card during August. I first suspected a problem when Sainbury’s started to decline my Curve Card so I stopped using it. Despite this, let’s be clear the use of a Curve Card linked to a Creation Card does not break any published Creation terms and conditions for use of the card. However, not honouring free hotel nights earned and not transferring IHG points earned to an IHG account does break Creations terms and conditions and the rules of the FCA. My comment was not a beef with Head for Points but a way of bringing the possible risks of using a Curve Card to the attention of others.

        • Char Char says:
          18 Nov18 November 11:55

          Yes Creation are clearly the ones in the wrong, it also makes no sense for people to keep assuming everyone was doing NSandI constantly which I am sure majority were not.

          I see it as quite slanderous to keeping accusing everyone of doing mass MS through NSI, the fact of the matter is Creation had a poorly run card and didn’t cover themselves for NSI transactions when they clearly had blocked others such as investment accounts. Never mind the fact that Creation was losing money hand over fist.

        • John says:
          18 Nov18 November 15:19

          I’ve used, and am still using, curve at sainsburys with no problems at all. I didn’t use creation as the underlying at sainsburys, but I did use it at other places (not ns&I) and I received my points for October and no cancellation letter.

        • Track says:
          18 Nov18 November 15:52

          But the witholding of free night and IHG points is Creation’s rogue behaviour, and rampant breach of contract (collecting money for service and not providing it).

          I am now of the opinion that Creation has deliberately decided to pocket forward-2022 annual fees on cards under cancellation notice, proactively using the initial FCA reaction as their defence and cover.

          Creation, like Barclays/Barclaycard — such lenders can suddenly find any reason to dislike your business, such as a cash deposit of 1,000 at branch. Yes Curve activity is a dislike but there would be something else with these lenders from time to time.

      • bigdave says:
        19 Nov19 November 13:16

        I fail to see why no-one but IHG or their card numptees responsible for this – leave HFP & Curve out of it.

    • Rui N. says:
      18 Nov18 November 10:39

      At this point there is no risk trying to link a Creation card to Curve, as that doesn’t work anymore.

      • Geoff says:
        18 Nov18 November 12:09

        That is absolutely true. However, another reader has already commented, that other card issuers could be sitting on the sidelines waiting for the outcome of any Creation/FCA case. If for some obscure reason Creation gets away with its actions others could follow. If this happens hopefully it will not be in such a draconian and some could say spiteful way that Creation has acted. This could all have been avoided if Creation had simply written to its cardholders and advised them that the use of Curve linked to its cards was not an acceptable practice.
        Lets me re-iterate that my comments are not beef with Head for Points – it does an excellent and thorough job at presenting opportunities to its followers. It is up to the readers to make their own decisions based on all the information on the risks available . I was merely pointing out from my own experience one of those risks.

        • Rui N. says:
          18 Nov18 November 13:53

          Like I’ve replied to that person, other cards already acted as they needed. And they could have closed accounts if they wanted to, there is no need to wait on any FOS proceedings to know they can close any accounts they want.

        • John says:
          18 Nov18 November 15:21

          Creation did write to us in the form of a rude text message. We then stopped using curve with them but they still cancelled many cards (not mine)

          • Mikeact says:
            18 Nov18 November 17:48

            I have 5 underlying cards with Curve and have yet to have a problem since day 1, and I use it….a lot.
            Seems to me on here that it’s only those with Creation that have problems….for the rest of us ? Life goes on.

  • Roy says:
    18 Nov18 November 11:32

    Aren’t the interchange fees set by the card issuer, and not by the scheme? In which case, the real dispute is probably between Amazon and a major UK issuer of Visa cards – but Amazon can’t refuse just a single issuer so have opted to refuse all Visa cards.

  • Rui N. says:
    18 Nov18 November 15:56

    No, all EU regs were translated into EU law as part of the Brexit bill. In this particular case they are outside the scope because the UK law that translated Reg. 2015/751 into UK law did not impose a cap on transactions between the EU and non-EU countries.

    • NFH says:
      18 Nov18 November 16:22

      The implementation of Regulation (EU) 2015/751 into UK law is an irrelevant red herring. For a merchant that’s based in Luxembourg (Amazon), the only regulation that matters is Regulation (EU) 2015/751 itself, not any UK implementation of it.

      Since Brexit, Regulation (EU) 2015/751 no longer applies to UK-issued cards, which means that the 0.3% interchange fee cap no longer applies. It’s as simple as that. Nothing to do with online vs offline.

      • Rui N. says:
        18 Nov18 November 16:44

        No. If you use a UK card (or any card issued anywhere in the world) on a POS in the EEA the interchange cap applies.

        • NFH says:
          18 Nov18 November 16:49

          Which legislation do you say imposes a cap on interchange fees charged in the EEA by card networks to EEA-based merchants with respect to UK-issued cards?

          Note that the UK has no jurisdiction to impose such a cap. The UK has jurisdiction to impose a cap only on interchange fees charged to UK merchants, not to EEA merchants such as Amazon.

  • Pauline Roberts says:
    18 Nov18 November 16:19

    New day who are behind the Amazon Mastercard credit card has very poor reviews. In addition: begite finding this out I did the ‘elibility/soft touch search׳ and got turned down. This is despite having a very high excellent credit rating. I wanted one for reward points like my current Barclaycard one goes which Is Visa. If they don’t retract on this I will be joining all those who are cancelling their Prime account.

  • Nigel W says:
    18 Nov18 November 16:28

    Likewise here!

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