Amazon Backs Off Its Visa Ban in the U.K.

Amazon announced that it will continue to accept Visa credit cards in the U.K., reversing on its previous threat to stop accepting Visa just prior to the deadline. This change of heart comes as the two companies are working to resolve the dispute over fees. Merchants and the networks have argued for many years over interchange fees, and it is typically large merchants that lead the charge. Threatening to refuse to accept specific cards is a relatively extreme step but not unprecedented. We had expected Amazon and Visa to ultimately work out a solution, but whether this would be done prior to the deadline was unclear. As such, we are pleased by this development. However, we don’t believe the loss of volume would have been material relative to Visa’s overall business and believe this situation would have been significant only if it prompted other retailers to follow suit. We will maintain our $221 fair value estimate and wide moat rating for Visa.