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Sunday, November 28, 2021

Visa and Amazon Have Been Embroiled In A Credit Card War

The current world is filled with fast payments, which has resulted in Visa feeling a bit isolated- similar to one that is left out of most parties. The previous week heralded pretty bad news for the firm, with Amazon stating that it would not be accepting credit cards that are branded by this company from the customers of the UK starting next year.

This would follow the snipe taken by Amazon towards this company in Singapore and Australia- where the conglomerate put out a small fee for those customers who were paying through these credit cards. And to add insult to the injury, Amazon also mentioned that it would think about switching from this credit card to Mastercard. 

Why Is Amazon Sidelining Visa?

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Amazon has cited that one of the major reasons behind its shift from Visa stems from the latter’s high fees of processing- although certain data have reported that the fees of Mastercard are the same in the UK anyway.

Al Kelly, the CEO of the credit card company has stated that he finds it pretty odd that they are claiming their shift due to high fees of processing when the substitute seems to have the same processing fee too. Most payment analysts have also considered the ditching of this credit card company as a negotiation tactic that would lead to the credit card company reducing its processing fees. 

While this move might not hurt the bottom line of Visa, it will definitely affect the channel that both this credit card and Mastercard have spent decades building. Both the companies have been among the highest margin-setters in the S&P 500, at 65.6% and 53.3% respectively. 

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It can be ascertained that Amazon’s move will certainly disrupt the Visa-Mastercard duopoly that seems to be the norm in card payments. 

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