The expected change on the use of Visa credit cards will no longer take place on Wednesday 19 January and the online retailer is working closely with Visa on a potential solution that will enable customers to continue using their credit cards.
Visa has previously said it was in discussions with Amazon over the changes of payment fees, adding it was "working toward a resolution.”
The u-turn gives customers more time to swap their payment method and it is currently not known if or when the changes will now take place.
What does the delay mean?
The delay means there is more time to avoid your account being disrupted, for example your Prime membership being paused or cancelled.
You can change your details on the “manage your subscription” page in your Amazon account.
When the ban comes into effect, Visa debit cards will be allowed as a payment option.
What is the row between Amazon and Visa?
Amazon has said Visa’s rising payment fees significantly affects its sellers and creates an "obstacle" for small online shops who are trying to keep their prices competitive.
The online retailer said costs should decreasing over time due to technological advances, "but instead they continue to stay high or even rise".
An Amazon spokesperson said: “The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers.”
The spokesperson carried on to say: “As a result of Visa’s continued high cost of payments, we regret that Amazon.co.uk will no longer accept UK-issued Visa credit cards as of 19 January, 2022.”
Visa said in a statement it was "very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins."
What plans have Visa previously announced?
Amazon decided to make this change to UK customers because of the high fees charged by Visa to process transactions.
Last year Visa announced plans to increase interchange charges on items ordered in the UK from Europe.
The company informed its 4,000 clients of plans to increase interchange fees in March.
Under this change, the rate increased to 1.5% for online credit card payments.
For debit card transactions, the rate rose from 0.2% to 1.15%.
The move will affect online transactions with EU-based companies in sectors such as online retail, hospitality and travel.
Interchange payments are levied on behalf of banks each time a payment goes through, with the money then passed on to the card-issuing bank.
What about other payment providers?
Mastercard made a similar move to Visa last year.
In January, the rival company said EU-based businesses could be asked to pay up to five times more fees when UK consumers order an item from abroad.
The EU introduced a cap on interchange fees in 2015 after concerns that hidden costs were leading to huge charges for both companies and customers.
However, Mastercard said that the current cap no longer applies now the UK has left the EU, warning that payments between the UK and European Economic Area are now "inter-regional".
Mastercard currently charges a 1.5% fee for every online credit card payment from the UK to the EU, up from 0.3% currently.
For debit card payments, the fee rises from 0.2% to 1.15%.
Kevin Hollinrake, chair of the all-party parliamentary group on Fair Business Banking, is calling for regulators to introduce a new cap.
He said: "This smacks of opportunism and I would urge the regulators to step in as a matter of urgency to ensure that financial institutions do not use Brexit as an opportunity to hike up costs that consumers will ultimately bear."
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