Like all major tech companies, Amazon already recording tons of customer data from its e-commerce site, voice assistant Alexa, Kindle catalogs, Audible audiobooks, video streaming, music app, home security cameras and phone trackers. fitness. Payments are no exception. But most of the time, this data mining happens in the background.
However, with the announcement of the Visa credit card ban in November, Amazon has created a sort of unique controlled experience.
Amazon was due to stop accepting Visa credit cards in the UK tomorrow (January 19), before making a U-turn yesterday (January 17). Since November, customers have been reacting, and with the continued dispute between Amazon and Visa, it has become a test of loyalty.
“Think of all that data Amazon just captured when it announced the Visa ban,” says Ben Goodall, CEO of online payments company Banked.com. “Who switched to a MasterCard/Amex? Who canceled their Prime membership? Who applied for an Amazon card? Who did nothing? Who complained? All the information you’ll need if you’re building the super crate of the future. »
Amazon’s Festive Cheer
In a timely move, Amazon announced the ban coming ahead of Black Friday and the Christmas shopping period – “a time when there is increased spending”, Goodall points out – but kept the Visa payment option. open all the way.
With the surging omicron, online shopping is accelerating, likely generating a treasure trove of data. Amazon ranked as the most visited online shopping site in the UK over Christmas. Meanwhile, the company was offering monetary incentives of up to £20 ($27) to encourage Brits to set a non-Visa debit or credit card as their default payment method.
Also, by not going after Mastercard either, which has also increased interchange fees and is the larger of the two players in the credit card industry—Amazon has increased its own ecosystem. (His credit card issuing partner is Mastercard.)
Others have also benefited. For example, JPMorgan Chase’s digital bank, Chase, offered its debit card users 3% cash back on Amazon purchases through the end of 2021, a day after Visa’s announcement.
Amazon wants to change online payments
The latest salvo against Visa credit cards is part of a larger battle to revamp online payments.
“Amazon is once again urging people to rethink the fundamentals of retail. Payment is a crucial part of the process that has long revolved around card providers and the fees they charge. Even the arrival of mobile payments like Apple Pay and Google Pay hasn’t disrupted card processing in the way that today’s news will,” said David Maisey, CEO of MultiPay Global Solutions. “With Amazon questioning Visa’s fees, you can be sure other retailers are looking at them as well.”
By reversing its decision, Amazon has also protected itself from a major financial blow. The company was about to lose nearly £1.4 billion following the ban on Visa credit cards. More than 13% of the company’s 48 million customers in the UK planned to cut spending or give up shopping altogether. And he got the benefit he wanted: data to use as leverage.
Therefore, he can not only negotiate a better deal with Visa, but also encourage others to innovate. In December 2021, Barclays launched a “reusable credit accountfor UK customers, allowing them to spread the cost of qualifying purchases on amazon.co.uk in equal monthly installments over three to 48 months.
Why Visa plays the game
But Visa is still not letting go of Amazon. Why?
Partly because of the bad press. This is driving more and more merchants to embrace new payment methods like open banking and account-to-account transfers in a way that increase choices and reduce friction both for buyers and sellers. In the long run, seasoned card users can quit this habit entirely. And if that’s the trend, Visa needs to know.