As Amazon and surcharges go in Singapore, might there be signals or tea leaves for other countries?
In a statement emailed to PYMNTS on Tuesday (Aug. 10), an Amazon spokesperson noted that the eCommerce giant is putting a surcharge in place in Singapore for transactions that use the Visa card. The surcharge equates to 0.5 percent, according to the information sent to PYMNTS. The surcharge will take effect on Sept. 15.
In its emailed statement, the company said that “the cost of accepting card payments continues to be an obstacle to providing the best prices for customers. These costs should be going down over time with innovation and technological advancements, which allows merchants to reinvest savings into low prices and shopping enhancements for customers. Yet, despite these advancements, some cards’ cost of payments continue to stay high or even rise.”
The company said that as that cost continues to rise, and with the surcharge in place, “we understand this is inconvenient for customers, and encourage them to switch to other payment methods moving forward in order to avoid a surcharge.”
Amazon stated that it anticipates a “future that is less card-centric” in the coming years.
Call it a shot across the bow, perhaps. The move is one that speaks volumes to, well, Amazon’s volumes. Tacking on the surcharges seems to imply that Amazon is confident consumers will swallow the upcharge if they want to use their cards.
Visa, for its part, is slated to hike interchange fees, which the merchants pay to banks for card transactions. Visa, along with Mastercard, said during the spring that it would delay planned interchange hikes, perhaps most notably in the U.S., until next year.
The hikes would come right into the continued trend where consumers, overall, are spending with their cards more often, and certainly online – and though debit still holds sway, credit is showing green shoots. As noted in recent earnings reports, transaction volumes overall swelled by double-digit percentages, and even in-person transactions are picking up steam.
Amazon’s announcement may or may not signal a rift with Visa, but the nod toward a “future that is less card-centric” seems also to be a nod toward an age when efforts to sidestep the traditional economics of transactions – through open banking, for example, and account-to-account fund flows – will gather momentum.
In the meantime, here in the U.S., surcharging is becoming a bit more visible, and a bit more viable.
Colorado, for example, recently became one of the latest states to let merchants put surcharges in place. In that state, merchants can surcharge up to 2 percent of the purchase price or cost tied to processing. As noted in this space, there are only two states, Massachusetts and Connecticut, with surcharge bans in place.
For Amazon, at least, Singapore may be a first stone cast at card payments – with ripple effects to come.