Consequences Of Brexit [Part 9] Read First Post Before Posting

[the_bloke]

At least we aren't tear gassing them in their attempts to cross the channel I suppose.

 

https://www.bbc.co.uk/news/world-europe-59302919

[melthebell]

20 minutes ago, the_bloke said:

At least we aren't tear gassing them in their attempts to cross the channel I suppose.

 

https://www.bbc.co.uk/news/world-europe-59302919

I'm sure some on here would like it employed as a tactic though

[L00b]

The EU  statutory cap on interchange fees does not apply to the UK any more.
 

So VISA recently jacked it up for UK-issued VISA credit cards.

 

Consequence: 

 

 

If you have a UK VISA credit (*not* debit) card registered with Amazon for payments, and recently received an email from Amazon about future payments, this is why.
 

Expect Netflix and other large-scale service providers with card-based subscription or purchase models to follow suit. VISA May fold and u-turn under the combined pressure. Or it may not.

[the_bloke]

The interchange fee is because Amazon processes all it's payments in Luxembourg, so the fee applies with UK-Luxembourg transactions.

 

Perhaps if it moved it's UK transaction processing to the UK it wouldn't have a fee to pay (but obviously, pay more tax).

 

Interesting to note that Mastercard charges the same fee, but since Amazon has a branded Mastercard they aren't blocking Mastercard payments.

[L00b]

31 minutes ago, the_bloke said:

The interchange fee is because Amazon processes all it's payments in Luxembourg, so the fee applies with UK-Luxembourg transactions.

 

Perhaps if it moved it's UK transaction processing to the UK it wouldn't have a fee to pay (but obviously, pay more tax).

 

Interesting to note that Mastercard charges the same fee, but since Amazon has a branded Mastercard they aren't blocking Mastercard payments.

The interchange fee is paid by the transaction acquiring bank (Amazon/its bank here) to the card issuing bank  (UK bank that issued the VISA credit card,e.g. RBS, NatWest etc).
 

The fee does not apply because Amazon processes card payments in Lux (or wherever else), it applies because the transaction involves a VISA credit card, irrespective of the jurisdiction(s) involved.

https://en.wikipedia.org/wiki/Interchange_fee#/media/File:GAO_report_on_Interchange_fees.jpg

 

The interchange rate in the EU is capped at 0.3% by law, currently that rate is 1.5% in the UK: an Amazon acquiring unit shifted to the UK, would still foot the 1.2% differential in interchange fees on Amazon transactions involving UK-issued cards.
 

High interchange fees are certainly a problem in many other (non-EU) countries, to be sure. 

Edited November 17, 2021 by L00b

[the_bloke]

1 hour ago, L00b said:

The interchange rate in the EU is capped at 0.3% by law, currently that rate is 1.5% in the UK: an Amazon acquiring unit shifted to the UK, would still foot the 1.2% differential in interchange fees on Amazon transactions involving UK-issued cards.

The rate in the UK is 0.3% for UK-UK processing.

 

https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/april-2021/luxembourg-interchange-april-2021.pdf

 

Compare with Luxembourg; 0.3%, the EU cap.

 

https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/april-2021/luxembourg-interchange-april-2021.pdf

 

The 1.5% is when processing a transaction made outside of the EU:

 

https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/inter-eea-interchange-jun-2021.pdf

 

So my point still stands, if Amazon processed UK payments in the UK then this wouldn't be an issue.

 

[altus]

53 minutes ago, the_bloke said:

So my point still stands, if Amazon processed UK payments in the UK then this wouldn't be an issue.

It also doesn't change the fact that VISA were only able to do this because of Brexit.

[the_bloke]

13 minutes ago, altus said:

It also doesn't change the fact that VISA were only able to do this because of Brexit.

So did Mastercard, and no one cared or even noticed.

Edited November 17, 2021 by the_bloke

[L00b]

1 hour ago, the_bloke said:

The rate in the UK is 0.3% for UK-UK processing.

 

https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/april-2021/luxembourg-interchange-april-2021.pdf

 

Compare with Luxembourg; 0.3%, the EU cap.

 

https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/april-2021/luxembourg-interchange-april-2021.pdf

 

The 1.5% is when processing a transaction made outside of the EU:

 

https://www.visa.co.uk/dam/VCOM/regional/ve/unitedkingdom/PDF/fees-and-interchange/inter-eea-interchange-jun-2021.pdf

 

So my point still stands, if Amazon processed UK payments in the UK then this wouldn't be an issue.

 

It’s a fair cop, and your point stands indeed, but it remains hypothetical all the same.

 

What are the chances of Amazon restructuring its EEA payment processing for the sake of UK cardholders?

 

Depends on the numbers in play I suppose, and the relative strength of the parties.

 

Amazon’s messaging to UK cardholders today, suggests that such chances are slim.

[the_bloke]

3 minutes ago, L00b said:

It’s a fair cop, and your point stands indeed, but it remains hypothetical all the same.

 

What are the chances of Amazon restructuring its EEA payment processing for the sake of UK cardholders?

 

Depends on the numbers in play I suppose, and the relative strength of the parties.

 

Amazon’s messaging to UK cardholders today, suggests that such chances are slim.

Indeed.

 

https://www.theguardian.com/technology/2018/apr/25/from-seattle-to-luxembourg-how-tax-schemes-shaped-amazon

 

I'm not a tax expert, but I imagine that processing all UK payments in the UK would expose them to a bigger tax bill. If the tax bill is more than the expected loss of sales due to not accepting UK Visa credit cards then something might change, but I imagine the tax bill would be greater than the money they stand to lose.