The news: Amazon and Visa reached a global deal on credit card acceptance after a public disagreement over interchange fees, per the FT.
How we got here: The dispute between the two has played out for months across multiple markets as Amazon attempted to pressure Visa into lowering its fees.
Neither company confirmed the terms of their agreement, which also includes “a joint commitment to collaboration on new product and technology initiatives to ensure innovative payment experiences,” per Visa. But Amazon’s change of plans may be the result of improved merchant card fee terms with Visa, which we predicted was a possible outcome.
The big picture: With so much at stake, the deal may bring both firms a sense of relief that what could have been a costly corporate spat has ended.
Because Amazon accounts for 12.5% of global ecommerce sales, it could use its heft to pressure Visa to ink a more accommodating fee structure—outlining a strategy that other large merchants could follow. But Visa credit cards dominate the global market, so losing its business in key markets could have created problems for Amazon, which may have also forced the merchant’s hand.
What’s next? The industry heavyweights’ dispute highlights multilateral fee-related tension that threatens to boil over: