Amazon said earlier this week that it would no longer accept Visa credit cards issued in the United Kingdom owing to high transaction interchange costs. Consumers who typically use Visa cards will receive £20 off a transaction if they alter their preferred payment method by January 19, according to the business.
The move follows Amazon’s efforts in Singapore and Australia to limit the usage of Visa-issued credit cards, where the e-commerce giant imposed a 0.5 percent premium on purchases made with those cards. Customers provided gift vouchers in both situations to urge them to switch payment methods.
While Amazon is asserting its market dominance in an effort to reduce transaction fees, which “continue to be an obstacle for businesses striving to provide the best prices for customers,” according to a company spokesperson, it is far from alone in its desire to wean customers away from high-cost payment methods. The emergence of digital wallets, the introduction of “buy now, pay later” (BNPL) payment alternatives, and a larger push toward ACH or account-to-account (A2A) transactions are all part of a campaign by businesses to lessen consumers’ overreliance on credit cards.
For the time being, let us concentrate on BNPL and why it’s becoming a more appealing payment option for large e-commerce businesses such as Amazon and Walmart, as well as merchant platforms such as square and Shopify.
It is not just about the larger shopping trolleys. For years, the main selling point of BNPL services like Affirm, Afterpay, and Klarna has been that they enable merchants to raise average order value while lowering cart abandonment. Affirm’s merchant transaction costs vary based on the structure of the installment offering, which considers factors such as cart size, term duration, and whether the loans are given at 0% APR or with interest-bearing installments.
For years, the main selling point of BNPL services like Affirm, Afterpay, and Klarna has been that they enable merchants to raise average order value while lowering cart abandonment. Affirm’s merchant transaction costs vary based on the structure of the installment offering, which considers factors such as cart size, term duration, and whether the loans are given at 0% APR or with interest-bearing installments.
