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

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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.

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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.

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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 by L00b

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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.

 

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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.

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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 by the_bloke

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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.

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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.

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1 minute ago, the_bloke said:

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.

I’m not at a tax expert either, and Amazon (and many others) are nothing if not world-class black belts in structuring for fiscal optimisation…but one thing they’d sure be exposed to, is higher overheads to start with.
 

If that figure is in any way comparable to the interchange fee differential, it would be diminishing returns territory right from the off. Moreover, at the beck and call of a (‘the’) card scheme member.

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On 14/11/2021 at 08:59, West 77 said:

 These economic migrants are not refugees and are criminals and not the sort which will benefit our country.

 

On 14/11/2021 at 13:30, RJRB said:

Your concern for fellow members of the human race tugs at my heart strings.

 

Should we really be embracing hordes of criminals as they illegally enter the UK, letting our heart strings be tugged as they do their best to break our laws and make a mockery of the borders of our overcrowded island and its stretched social resources? 

 

Or should our concern for the goals and aspirations of criminal economic migrants be - perhaps - less important than our concern for the welfare and protection of our own citizens?

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2 hours ago, Caswall said:

 

 

 

Should we really be embracing hordes of criminals as they illegally enter the UK, letting our heart strings be tugged as they do their best to break our laws and make a mockery of the borders of our overcrowded island and its stretched social resources? 

 

Or should our concern for the goals and aspirations of criminal economic migrants be - perhaps - less important than our concern for the welfare and protection of our own citizens?

I don’t see it as an either/or topic

I don’t view refugees collectively as criminals.When I see some of the desperate cases including young children then they deserve better.

 

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1 hour ago, RJRB said:

I don’t see it as an either/or topic

I don’t view refugees collectively as criminals.When I see some of the desperate cases including young children then they deserve better.

 

Let's revert to facts.  We're not talking about refugees.  We're talking about economic migrants who are illegally entering our country.  They are criminals - that is fact.    If they bring 'poor little kiddies' with them, they are even more callous.

 

They deserve nothing but immediate deportation.

 

I'm perhaps a tad old school, but I have more concern for my law-abiding neighbours and other law-abiding members of the community on our tiny island than I am for the world's law-breaking human detritus.

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