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| Amazon accepts Visa credit cards worldwide |
Amazon has reached an agreement with Visa to accept its credit cards on its network, ending a standoff that could disrupt e-commerce payments and affect US payment processors.
Details of the deal were not disclosed. But Visa and other payment card fees are under increasing pressure as more shoppers come online during the pandemic.
The dispute highlights the growing influence of retailers in the battle of fees.
Amazon announced in November that it was considering contracting with Visa as a partner for co-branded credit cards in the United States.
This comes after the e-commerce giant previously confirmed that it will no longer accept Visa credit cards in the UK due to high transaction fees.
"The agreement means that Amazon customers can continue to use Visa credit cards in their stores," the e-commerce group said in a statement.
Neither side mentioned any fees that might be imposed in the future. The problem arose in the post-Brexit UK, where the EU's cap on card fees no longer applies.
Some analysts see the dispute between Amazon and Visa as a bad sign for the credit card industry. They said this indicates a problem in the larger US market.
UK lawmakers plan to review increases in Visa and Mastercard fees after the country's payments regulator found no evidence to justify the increases.
Visa reaches far-reaching global agreement with Amazon
In October, Visa began charging 1.5% of the transaction value for credit card payments made online or by phone between the UK and the EU and 1.15% for debit card transactions, compared to 0.3% and 0.2%. The average credit card processing fee in the industry ranges from 1.5% to 3.5%.
In the past, credit card processing fees were viewed by retailers as an inevitable expense. But this may change with innovations in payments and increased choices for consumers.
In 2020, credit cards accounted for a third of e-commerce spending in North America. But other payment methods are also becoming more powerful.
As alternative payment methods have proliferated over the years, the pandemic has accelerated the downward trend in credit card apps and boosted the popularity of "buy now, pay later."
The share of credit cards in e-commerce spending in North America has fallen 7% over the past year. Now the percentage of billed subscriptions purchased has risen to 78%.
"The agreement includes acceptance of Visa across all Amazon stores and locations, as well as a shared commitment to collaborate on new products and technology initiatives," a Visa spokesperson said.