Paying for Christmas just got harder

By Vanessa Chance

Last week, I received an email from Amazon to say that I could no longer use Visa when shopping on their website. I initially thought ‘This must be a scam email. How can one of the biggest online retailers stop using one of the main payment providers?’ But the message was genuine and will have wide ramifications for Visa and its customers, and for relations between retailers and payments providers going forward.

Having worked in personal finance for most of my career, I always have more than one credit card, so the move does not really impact me personally. However, I know from friends and family that many people only have one method of payment and if this is Visa, it will be a real blow to them. Katie Brain, the Banking Expert at Defaqto says “This is bad news for consumers, as it limits their choice of payment types. If you are looking to make a purchase of an item which is worth £100 or more it is wise to use a credit card instead of a debit card, as you are then protected by section 75 if something goes wrong. This is especially useful if you are making a purchase through Amazon marketplace, which are third party suppliers.”

That is the key issue with this, having a choice affords greater protection. Experts will tell you that you should always pay for anything over £100 with a credit card, so that you can get the money back if something goes wrong eg. if the retailer goes bust or fails to deliver the promised goods. Experts would also advise that you spread your risk by having more than one credit card in case your card is lost or stolen. They will also say that you should choose a credit card based on the way you want to use it, as some cards are better-suited for short-term borrowing, long-term borrowing, or for clearing debt. If retailers start stripping away the methods of payment you can use, this takes away a vital safety net for consumers.

It is not a new thing for businesses to limit payment choice. Remember when airlines used to add a credit card when you booked flights, which could be up to £5 a ticket; or when corner shops used to add 50p to your bill if you wanted to pay with a card and it was under £10? It was money for old rope, and they got away with it for years until the government legislated against it. More recently, we have been forced into paying with contactless cards in the wake of the pandemic as cash all but disappeared.

Still, this latest move by Amazon is worrying, as they dominate the online shopping world. The timing is interesting too with Black Friday almost upon us and Christmas just a month away. This move will surely hurt Visa and it feels a bit like they are intimidating them into dropping their rates. It will be interesting to see if and how Visa retaliates. For shoppers, it may be time to consider alternative methods of payment or alternative retailers. With the high street open again, perhaps it is better to head back to the shops this year and leave the Christmas deliveries to Santa.