So who blinked first? With just days to go until Amazon’s scheduled block on Visa credit cards on its platform in the UK, the e-commerce giant yesterday halted its plan.

Did the mighty Amazon really capitulate to Visa in this ‘game of corporate chicken’?

According to both Amazon and Visa, the two companies are working together on a solution to their months-long corporate scuffle over Visa’s cross-border interchange fees, which Amazon considers too high. Neither company would disclose what the “potential solution” or “agreement” would be. And they’re unlikely to.

It could be that Amazon has negotiated its own rate from Visa – less than the 1.5% fee for credit card purchases, which Visa raised from 0.3% post-Brexit, now free from EU caps.

However, “it would be difficult for them from a competition law perspective to do a ‘special’ deal for Amazon,” says law firm Osborne Clarke.

Another, perhaps more likely, scenario is that Amazon was forced to back down - and the talk of “solutions” reached is simply an agreed face-saving exercise.

The ban would have hurt Amazon. A OnePoll survey found that 13% of Amazon’s UK customers – equivalent to 6.2 million people – intended to either reduce their purchases, or stop buying from the corporation as a result – a potential £1.4bn hit to Amazon UK’s revenue, OnePoll estimated.

On the other hand: “If the Amazon co-brand portfolio flipped to Mastercard, we believe the earnings impact to Visa would be less than 1%,” says Ken Suchoski, a payments analyst at research firm Autonomous.

But the victory for Visa – if that is what’s happened – is more than just averting a slight knock on earnings.

Amazon is not the only retailer rounding on card companies over fees. UK supermarkets are also taking on the major players.

In 2020, the Supreme Court ruled that the interchange fees charged by Visa and Mastercard were anti-competitive, and held that they were the product of a collective decision between issuing banks and the card schemes, which violated European and UK competition law.

In August last year, Sainsbury’s reached a settlement with Mastercard, and with Visa soon after. Other claimants from the Supreme Court case – Asda, Argos and Morrisons – have their Mastercard hearing scheduled for January 2023.

Other retailers – Levi, Superdry and AllSaints among them – joined the battle late last year, buoyed by Amazon’s stand.

With more retailer fee disputes and action likely incoming, Visa’s unblinking stance against the retail behemoth that is Amazon serves as a warning to the sector that it will not yield. If it can face down Amazon, what chance do you have? 

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