Why is Amazon doing this?
Merchants are required to pay interchange fees when they process card payments. These fees are set by payment networks like Mastercard and Visa. Before Brexit, the European Union set a limit on how high interchange fees could reach in the UK, restricting it to 0.3% of the transaction. Now the UK has left the European Union, Visa has increased their fees to 1.5%*, a significant increase for all merchants.
Karl MacGregor, CEO of Vyne said:
“Amazon’s decision to no longer accept Visa credit cards in the UK is further evidence - if any was needed - that existing payments are broken and stacked against the merchants that rely on them.
“What makes this news particularly striking is that this is one of the biggest brands in the world recognising that merchants on its platform truly are at the mercy of payment giants. These businesses already fork out thousands of pounds per annum only to be greeted with mid-contract price hikes, which are more often than not imparted on the consumer.
“Fuelled by post-Brexit price hikes this will be the first of many big business clashes with a payments giant. But online retailers should be reminded that there are other options out there and accelerate their efforts to offer new methods”.
What can merchants do?
When collecting payments via credit and debit cards, there is unfortunately no way to evade these high fees unless they are reduced by Mastercard and Visa themselves.
However, there is another way…
Account-to-account payments powered by Open Banking offer a cardless checkout option for merchants to add to their online stores. Providers such as Vyne, offer this at a much fairer rate than interchange fees as we cut out the middlemen involved in typical card transactions.
Not only is it a much cheaper option but there are other benefits for both merchants and consumers such as:
Same day refunds to improve customer satisfaction
Instant settlement to help manage cash flow
Seamless reconciliation to support day-to-day accounting
Better user experiences for customers