Amazon halts plan to block UK Visa credit cards amid talks

Amazon has dropped plans to block UK Visa credit card payments this week, as the two sides continue to try to resolve a dispute over payment fees.

"The expected  change regarding  the use of  Visa credit cards on Amazon.co.uk will no longer take place on January 19," Amazon said.

Visa said it was "working closely to reach an agreement".

Amazon said last year that Visa payment costs were "an obstacle" to providing the best prices for customers.

But Visa accused Amazon of threatening to restrict consumer choice. "When consumer choice is limited, nobody wins," Visa said.

Neither company has indicated when the talks might conclude. In an email to customers on Monday, Amazon said it was working closely with Visa on "a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk".

An EU-enforced cap on fees charged by card issuers is no longer in place in the UK following Brexit.

Both Visa and its rival Mastercard have raised the so-called interchange fee on cross-border transactions between businesses in the UK and the European Union following Brexit.

However, Amazon and Visa said last year that their dispute had nothing to do with the UK leaving the EU.

They have been slugging it out in public and in private, now these two corporate heavyweights are going in for an extra round.

Amazon is ahead on points in this bout. Given this announcement has come so close to the deadline, many customers would have already switched their primary Amazon payment method away from Visa. But the online retailer would also have been hurt financially if it had followed through on its threat.

The cancelling of the deadline, and the fact a new end date has not been set, suggests a deal is near. Neither Amazon nor Visa are saying much to be able to judge quite how close they are to a compromise.

This dispute is about more than just fees. It is also about control. Don't forget that Amazon has taken a different course with Mastercard, which is behind Amazon's reward card.

Amazon has previously declined to say how much Visa charges the retailer to process transactions made on credit cards.

Visa also declined to comment, though it claimed that on average it takes less than 0.1% of the value of a purchase.

The Payment Systems Regulator has raised concerns about competition in this sector, which is dominated by Visa and Mastercard.

In a strategy published last week, it said one of its priorities was to promote competition between UK payment systems.

"We will focus more on improving competition between payment systems, not just competition within payment systems," its managing director Chris Hemsley said.

"This is important because we know that the future of retail payments is becoming increasingly about digital payments, most of which are currently made using card payment systems."