Amazon to stop accepting Visa credit cards from January 2022 – here’s all you need to know

[Deleted User]

wild666 said:

Some people use their credit card only when they shop. Many credit cards are visa so that could cost amazon dearly in lost purchases and prime subscriptions. 

Only Barclays, Nationwide and Co-op solely issue Visa credit cards so I doubt that Amazon's sales will collapse.

People can use/obtain a Mastercard or Amex card of any flavour. They can also use debit cards, use/obtain a Curve card if absolutely necessary or even buy Amazon gift vouchers. Debit cards (including Curve) and gift vouchers obviously nullify Section 75 coverage though...

Ectophile

born_again said:

Visa & Amazon will reach a agreement as Visa will not want to lose the money they make from Amazon.

Have to say well done Amazon for making the stand. As only a company with their clout could do it.

It's one greedy company making a stand against another greedy company.

All Amazon's sales in the UK actually go to Luxembourg.  That way they make no profits in the UK, so pay no UK tax on the profits here.

But since Brexit, Luxembourg now counts as a foreign transaction.  So Visa charge extra transaction fees compared with a UK customer buying from a UK company.

Amazon are miffed that Visa are taking a cut of Amazon's profit and have thrown their toys out of the pram.  Amazon are probably hoping that Visa will make them a special deal, that doesn't apply to anyone else.

Sandtree

Ectophile said:
Amazon are miffed that Visa are taking a cut of Amazon's profit and have thrown their toys out of the pram.  Amazon are probably hoping that Visa will make them a special deal, that doesn't apply to anyone else.

Volume based discounting isn't an unheard of or rare concept

Given the growing percentage of Amazon revenues coming from corporate services like AWS which are almost certainly not settled by credit card any deal they manage to strike would inevitably result in similar/better deals from the larger retailers like Walmart and Costco

The only card fee negotiation I was involved in I was too much on the edge and so only got the combined fee rather than any breakdown by component and have no idea if any discussions were had on the interchange rate

Migster

I don't think interchange and scheme fees are negotiable as they apply across the board, so if Visa cut Amazon a deal it would apply to all merchants. I have visibility of the domestic scheme fees and with these, it is Mastercard that are more costly. Perhaps it is different with the cross-border fees but I can't help thinking this is just a ruse by Amazon to push sales of their own Mastercard credit card. 

twopenny

It's win win for Amazon I think.
Some will rush for the Amazon credit card and many to buy as much as they can before the deadline which is the nature of the beast.

LaHostessAvecLaMostess

IanManc said:

Ectophile said:

born_again said:

Visa & Amazon will reach a agreement as Visa will not want to lose the money they make from Amazon.

Have to say well done Amazon for making the stand. As only a company with their clout could do it.

It's one greedy company making a stand against another greedy company.

All Amazon's sales in the UK actually go to Luxembourg.  That way they make no profits in the UK, so pay no UK tax on the profits here.

But since Brexit, Luxembourg now counts as a foreign transaction.  So Visa charge extra transaction fees compared with a UK customer buying from a UK company.

Amazon are miffed that Visa are taking a cut of Amazon's profit and have thrown their toys out of the pram.  Amazon are probably hoping that Visa will make them a special deal, that doesn't apply to anyone else.

Not according to the BBC. They report that Amazon paid £492million in direct taxes on £20.63billion sales in the UK in the last tax year. In the tax year before it had paid £293million.

 Amazon pays £492m in UK tax as sales surge to £20.6bn - BBC News 

Amazon said employers' national insurance taxes accounted for the majority of the bill as it took on 22,000 more staff over the course of the last year.

Right, so the majority of their direct bill was Employers NI, which is 13.8%, but they paid a total tax of £1bn out of £20bn in sales, so about 5%.  Given that NI contributions are 13.8% and VAT is 20% (which dwarf their direct taxes) perhaps they've paid virtual nothing in some very key areas?  Perhaps corporation tax?

"As usual the accounts are legally compliant but opaque and lack the crucial information about intra-group transactions which enable the company to shift profits is not there," said Labour peer and emeritus professor of accounting at the University of Sheffield and University of Essex, Prem Sikka.

"Therefore it's impossible to know what their true economic profit is," Prof Sikka said.

Given the profits declared by competitors, Prof Sikka said Amazon's tax bill "seems very low", whereas, for retailers such as supermarket chains, tax bills as a proportion of sales were much higher.

"We need a complete change in accounting regulations which currently increase opacity rather than transparency," Prof Sikka added.

Professor of taxation law at King's College London, Ann Mumford agreed and said that there was a lack of public discussion around the rules which led to this amount of tax.

"It seems that Amazon realised that they would need to pay a respectable amount - and, are hoping that an increase of £3.8 million sounds like a lot of money," Prof Mumford added.

Sounds about right.

grandadgolfer

born_again said:

Visa & Amazon will reach a agreement as Visa will not want to lose the money they make from Amazon.

Have to say well done Amazon for making the stand. As only a company with their clout could do it.

So nothing to do with Amazon having a Mastercard credit card then

GaleSF63

I've seen it said that HSBC are changing from VISA to Mastercard. Does that mean that they replace existing VISA cards, or do they just do it when the old ones expire? Mine still has over 2 years. Hopefully it's just sabre-rattling on the part of Amazon so I won't do anything in a hurry.

Although I've had the email (only £10 incentive) there's been nothing on the website and I've ordered stuff in the last couple of days.

gingercordial

IanManc said:

LaHostessAvecLaMostess said:

Amazon said employers' national insurance taxes accounted for the majority of the bill as it took on 22,000 more staff over the course of the last year.

Right, so the majority of their direct bill was Employers NI, which is 13.8%, but they paid a total tax of £1bn out of £20bn in sales, so about 5%.  Given that NI contributions are 13.8% and VAT is 20% (which dwarf their direct taxes) perhaps they've paid virtual nothing in some very key areas?  Perhaps corporation tax?

"As usual the accounts are legally compliant but opaque and lack the crucial information about intra-group transactions which enable the company to shift profits is not there," said Labour peer and emeritus professor of accounting at the University of Sheffield and University of Essex, Prem Sikka.

"Therefore it's impossible to know what their true economic profit is," Prof Sikka said.

Given the profits declared by competitors, Prof Sikka said Amazon's tax bill "seems very low", whereas, for retailers such as supermarket chains, tax bills as a proportion of sales were much higher.

"We need a complete change in accounting regulations which currently increase opacity rather than transparency," Prof Sikka added.

Professor of taxation law at King's College London, Ann Mumford agreed and said that there was a lack of public discussion around the rules which led to this amount of tax.

"It seems that Amazon realised that they would need to pay a respectable amount - and, are hoping that an increase of £3.8 million sounds like a lot of money," Prof Mumford added.

Sounds about right.

I was responding to a comment that Amazon pay nothing on their profits, which wasn't true.

They paid £492million in direct taxes and if you add indirect taxes to that then the total tax contribution was £1.15billion, while Amazon's revenue from its operations in the UK that tax year was £20.63billion.

I didn't say that Amazon pay a fair amount, or enough, so you can quit with the sarcastic tone of your response.

You wondered whether Amazon paid "virtually nothing" in other taxes: "Perhaps corporation tax?". The answer is that only £18.3million in corporation tax was paid 2019/20 in the UK. That pretty much speaks for itself.

I actually had to do an analysis of Amazon's tax figures for work recently (I work in tax and my boss thought it would be interesting to do some digging into these as a comparison to our own business).  I won't bore everyone with the details, but just to say that the single company Amazon UK Services Ltd paid £18.3m in corporation tax in 2020.  That is only one company out of the bigger Amazon structure in the UK which has multiple companies.  It isn't the total amount of corporation tax that Amazon companies as a whole paid in the UK in 2020 - I don't have that figure as I couldn't be sure I had found all the legal entities, but it's much higher than that.

I have no other skin in the game re Amazon, Visa or whatever.

Grabs39

The incentive for getting their own card has gone up - just got a £40 gift card from them for getting their MasterCard (which I'll cancel in due course as I already have two other cards).

Within seconds of me signing the credit agreement, my default payment method has automatically switched from my Visa Credit card to their Mastercard. 

Plus they've then given me another £20 off for adding another card number.

I can certainly see them doing well out of this, but I'll try and make something of it too!