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Is the Amazon ban on Credit Cards running Visa a sign that the online ‘marketplace’ we all love is now beginning to abuse the privilege and responsibility of having so much retail power?

November 18, 2021 Leave a comment

I’ve literally just clicked ‘Order’ on a number of different items from my Amazon Account. It’s easy to use, the Prime service feels like ridiculous value with all the TV options as well as the FREE next day delivery service thrown in. And I can get many repeat items at prices that make shopping for them elsewhere seem like madness when I can make all of these purchases by using my Credit Card too.

Or rather it did. That is until I had a very matter-of-fact e-mail from Amazon yesterday morning, that explained I will no longer be able to use my Credit Card that operates under the VISA system on the Amazon website from January 19th.

Like many others I’m sure, it was very easy to immediately start thinking about how reasonable Amazon must have been and how equally unreasonable VISA must have been about rising handling fees if Amazon had felt it necessary to bring to an end to anyone paying for goods with a Credit Card that operates as a VISA Card in this way. Were you wondering if you were going to have to get a new Credit Card or contact your Bank to see if your Credit card could be issued another way?

Hands up. The story that Amazon is telling the world could be true. But what if there is more to this story and it is not all that it would seem?

Perhaps we should begin by recognising that the love we have for the convenience and apparent cost effectiveness that Amazon provides us means that as consumers in a (currently) globalised, touch-of-the-button retail marketplace, where we have culturally reached a place where we expect everything right now, we may well have become blind to the working practices and ruthless strategies that underpin the growth of a company that has a market share and influence over a growing number of other retailers that is colossal not only in the UK, but right across the World.

Next, we might consider that Visa is the largest card issuer in the UK and Ireland with a current market share given by www.statista.com of some 80%. Yes, that is a combination of both Credit AND Debit cards. But it gives a very good idea of the situation where we are.

The transaction fee that Amazon pays VISA back from every purchase made with a VISA is likely to be no more than a few pence already – and potentially less. But if it goes up by 1p for VISA, think about how much additional money they will turn over or add to their margin in terms of the number of transactions or purchases we make through Amazon, and therefore how much money in turn Amazon will then be potentially losing from its own bottom line.

However, with the level of business that these two monolithic businesses do together basically as partners, it is very difficult to imagine that a unique business arrangement has not been and would not still be possible where both parties continue to do very well out of what should be for them both a genuinely win-win and VERY lucrative cause.

With this all in mind, this step doesn’t really make that much sense. That is, if Amazon really is the Company that is all about the customer and putting the interests of the customer first as it tells us it is.

Regrettably, I’m inclined to believe it more likely that Amazon are taking this rather momentous step because they have demanded further concessions from VISA – which have been rejected. And that because of the market share they have, and the confidence they have in our loyalty as committed (or addicted) consumers, they believe that they can use us as to force VISA to give in, or that the alternative will be that we will just go elsewhere to find the tools to achieve our easy retail hit in some other way.

Whatever the motivation and cause behind this move, it marks a very ominous moment in time.

Irrespective of what Amazon has previously been doing or has done to secure the market share that it already has and uses to determine its ongoing meteoric growth, never before has a you will do as we tell you approach come into the open and been made in such a very public way.

Admittedly, many Amazon customers will not see anything concerning in the words that I have written above. But any company that is prepared to take a step like this and remain confident that its business will not be affected in any way may have already reached a point where it has attained a level of power and a position within the marketplace that should be of general public concern.

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