Thread by @finshots

Why is a credit card battle brewing between Amazon & Visa?

A thread. (1/n)🧵

Amazon is at loggerheads with credit card market leader Visa.

Apparently a couple of days back, Amazon told Visa credit card users in Australia and Singapore that they will be facing a 0.5% fee for using them on its websites there.

And now Amazon’s latest move is its announcement saying it will stop accepting Visa-branded credit cards in the UK starting next year.

What’s more, is that Amazon has been planning to switch its own co-branded card from Visa to MasterCard.

What’s with the sudden bad blood?

Well, Amazon has expressed concerns over Visa’s high processing fees of late. When you swipe your card at a counter, a small fee is levied by the processor i.e the likes of Visa and MasterCard, on the merchant for processing a transaction.

Amazon ditching Visa is a clear sign of discomfort from their side towards these processing fees. In fact, processing fees are often quite heavy on traditional businesses as well.

Every time you buy something for Rs. 100 using your plastic, it costs the merchant nearly Rs. 2 in processing fees.

Multiply that by thousands of daily transactions, and that can add up to a good amount. Which is why some merchants even refuse to accept credit cards.

And the thing is that Visa is a network company - they simply move the money, banks accept and dispatch it. But with the ongoing fintech disruption, there is a surge in alternative payment methods and direct bank to bank transactions.

And this has been threatening Visa and MasterCard, which is why they’ve been desperate to diversify as well.

So whatever be the modus operandi of Amazon, one thing is clear as day - there’s a threat to the Visa-MasterCard duopoly.

And how could things pan out at the end of this war? Only time will tell.

Sources:
~Amazon to stop accepting Visa credit cards - BBC

~Amazon vs. Visa and the coming fintech wars - Mint

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