Amazon- Visa spat has ripple effects amongst US retailers
The Merchant Payments Coalition (MPC) has written a letter to the Senate Committee on Banking, Housing and Urban Affairs and Committee on Financial Services to highlight the US shopping giant’s decision to stop accepting Visa credit cards and subsequent reversal of this decision.
This all started when back in November 2021, Amazon UK decided to stop accepting Visa credit cards from 19th Jan 2022, which the decision has been taken back after the decision with Visa. This issue was over the multilateral interchange fees charged by Visa.
The letter has highlighted that Amazon’s move has shown ‘how frustrated even the largest retailers are over skyrocketing swipe fees, and the situation is even worse for small retailers’. It also highlighted that lack of compensation has let the card networks on the likes of Visa and Mastercard and the banks that issue these cards ‘get away with price-fixing and other practices that would not be tolerated in any other industry’.
The letter says that the interchange fees charged to US retailers are four times more than the UK retailers and the total amount collected is 100 times as much. UK retailers on average are charged with 0.55% of MIF while for US retailers it is on average 2.22% for purchases made with Visa credit cards.
Through this letter, the MPC has urged the US authorities to look closely at what Amazon did with Visa and at the same time ‘bring about the competition that will require the U.S. card industry to play under the same rules as any other business’.
“Merchants want to be heard, but they don’t have the ability to reject either Visa or Mastercard to do so. Instead, they need transparency and competition that would allow market forces to result in reasonable swipe fees where all parties can benefit”, the letter noted.
MPC is a trade association that represents U.S. retailers, supermarkets, convenience stores, gasoline stations, online merchants and other businesses.
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