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Corporate goliaths Visa and Amazon are publicly clashing, but U.S shoppers don’t have to worry that their Visa cards will be rejected as they order gifts this holiday season at the mega-retailer.
The brouhaha is over fees Amazon pays Visa for processing payment transactions in the United Kingdom. Amazon claims those fees are too high and says it will stop accepting Visa credit cards on Jan. 19, 2022.
But Americans just skimming headlines might miss the fact that this issue involves Amazon in the U.K., not in the United States. For now, anyway. There’s been no move by Amazon — at least publicly — to ban Visa cards as a payment method for U.S. shoppers.
Asked about how the dispute would affect U.S. customers, an Amazon spokesperson in the U.K. said by email: "We don’t have anything further to add, but to be clear, this action only applies to U.K.-issued Visa credit cards used on Amazon.co.uk."
But U.S. cardholders could face some fallout later
Still, Amazon is reportedly clashing with Visa on other fronts as it considers shifting its popular co-branded credit card from Visa to Mastercard, according to news reports from Bloomberg, Associated Press and Reuters. And that move would have ramifications in the U.S.
Anytime a credit card changes payment networks or issuers, it can cause headaches for cardholders caught in the middle. For instance:
Card benefits can change.
Old transaction histories and records can be lost.
Credit scores can drop for brief periods.
Account numbers may change, meaning autopay bills could be affected.
Amazon currently has multiple co-branded credit cards through various partners:
A credit card issued by Chase has both Amazon and Visa in the name: the Amazon Prime Rewards Visa Signature Card. It’s highly regarded by consumers because for Amazon Prime members it offers 5% cash back on purchases at Amazon and Whole Foods for an annual fee of $0.
Customers without a Prime membership can apply for a different Visa credit card, the Amazon Rewards Visa Signature Card, also issued by Chase.
Amazon co-branded cards for businesses are issued by American Express.
Amazon's "closed-loop" store cards, which can be used only at Amazon, are issued by Synchrony Bank.
What Amazon claims
Visa and other payment networks like Mastercard act as middlemen between banks and merchants and get paid fees for that service. Those fees are the crux of the issue.
"The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers," the Amazon spokesperson said about the dispute in the U.K. "These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise."
He added that the plan to stop accepting Visa in the U.K. affects credit cards only, not also debit cards.
"With the rapidly changing payments landscape around the world, we will continue innovating on behalf of customers to add and promote faster, cheaper, and more inclusive payment options to our stores across the globe," he said.
A Visa spokesperson noted by email that U.K. shoppers will still be able to use Visa cards through the holiday season.
"We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins," she said. "We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions come January 2022."
Disputes aren’t uncommon
High-profile conflicts between major retailers and card networks can have a big impact on consumers.
For example, warehouse club Costco decided several years ago that Visa cards were the only credit cards it would accept in its stores, ditching a long run with American Express.
And in 2018, L.A.-based Foods Co. — a division of The Kroger Co. — stopped accepting Visa credit cards in multiple stores, in a dispute over Visa's fees. The ban on Visa cards was eventually lifted in October 2019.
It's unclear whether the current clash is posturing by Amazon to gain leverage or whether a rift will grow between the giant retailer and Visa.
But for U.S. shoppers, for now, paying with a Visa credit card at Amazon shouldn’t be a problem.
Information related to the Amazon Prime Rewards Visa Signature Card and the Amazon Rewards Visa Signature Card has been collected by NerdWallet and has not been reviewed or provided by the issuer of this card.