Amazon is to stop accepting Visa credit cards issued in the UK as transaction fees have skyrocketed post-Brexit.
In an email sent to UK customers, the firm said the move to block the credit cards came “as a result of Visa's continued high cost of payments”.
The ban will not extend to Visa debit cards, cards issued by other companies such as Mastercard, or Visa credit cards issued outside the UK.
People who pay for services such as Amazon Prime with a UK-issued Visa credit card have been asked to update their payment details before January 19, 2022, when the change will come into effect.
The news comes as a report from the British Retail Consortium and retail payments advisory firm CMS Payments Intelligence found that new rules after Brexit have increased credit and debit card costs by £150 million a year.
Brexit removed caps on transactions between the UK and the European Economic Area (EEA), which has led some companies to increase their fees by as much as five times. Amazon, which has its European headquarters in Luxembourg, is furious at the fee increases, according to Sky News.
Bloomberg quoted Andrew Cregan, payments policy adviser at the British Retail Consortium, as saying: “At a time when retailers are facing rising costs across the board, from higher energy prices to soaring shipping charges, it is likely that some of these five-fold fee increases will eventually be passed on to hard pressed consumers.”
BBC economics editor Faisal Islam said on Twitter that the "fivefold rise in credit card interchange fees arises out of having left EU and then having also chosen to leave the single market/European Economic Area".
"It is a classic example of an increase in Non-Tariff Barriers to trade with Europe, as a result of the deal," he said.
Islam added: "While that interchange fee for UK has gone up fivefold, after leaving the EU, should clarify this Visa-Amazon spat is not primarily about that part of the fee, but another part of the fees charged between cards and merchants." An Amazon spokesperson said: "The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers.
"These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise.
"As a result of Visa's continued high cost of payments, we regret that Amazon.co.uk will no longer accept UK-issued Visa credit cards as of 19 January, 2022." Addressing customers’ need to change their payment details on their system, the spokesperson went on: "We know this may be inconvenient, and we're here to help you through this transition so you can continue enjoying Amazon's low prices and wide selection.”
A Visa spokesperson said: "UK shoppers can use their Visa debit and credit cards at Amazon UK today and throughout 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.
"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."