CardsFTW #42: The Amazon and Visa News

The Amazon News

The past week’s big news was that Amazon announced it would stop accepting Visa cards in the United Kingdom and consider switching its very large and lucrative Amazon Visa Card program (issued with Chase) to Mastercard. Everybody is writing about this, not only the payments-focused publications.

Does it mean anything, though? Big co-brand deals come up for renewal frequently. It would be illogical for a brand not to consider switching networks. The card networks (Visa, Mastercard, etc.) make a tiny amount of each transaction and are focused on growing volume. The Amazon.com card is a top-volume co-brand program and something the networks want to fight over. In this sense, it’s not news at all that Amazon is considering switching networks. That is just a negotiation tactic.

Similarly, as I’ve written about many times before, merchants love to complain about the cost of card acceptance. (Nevermind that it would be impossible for Amazon to have grown to its current state without the power of digital card payments.) Telling the world you want to fight with Visa is an excellent way to get Visa to negotiate some concessions for you.

I debated writing about this. I’m perpetuating the idea that this is a big deal. I don’t think it is. I believe it is simply several gigantic companies have a public negotiation that will result in a change in business terms, but not a difference in how consumers pay for things. There are extremely few places (such as Costco) where there is an actual limit on payment network acceptance, and Amazon is a much broader customer base than a membership club like Costco.

Payments networks are all about ubiquity, as I wrote in my last piece about Square’s Cash App payments. Acceptance at 10% of the network isn’t enough, and neither is 90% to gain a true sense of security for the user that their payment will be accepted. Amazon doesn’t want to lose customers who only have Visa cards, and Visa doesn’t want to lose acceptance at Amazon. I am confident they’ll work it out. Amazon will probably save a few cents per transaction, and consumers will continue to pay the same way (and the same amount) as they did before.

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Another Buy-Now/Pay-Later Card

Hot on the heels of new cards from both Affirm and Zip, Klarna announced a new debit card offering in the United States. Much like these previous offerings, the Klarna card allows consumers to split a purchase at any merchant into four installments without a merchant integration to Klarna. Also, you can use the card to Pay Now, which is a fun announcement because paying now for things is pretty standard and not a significant new feature.

New Cards of Note

Voyager, a crypto exchange, announced its new Voyager Debit Mastercard®. The card is issued by Metropolitan Commercial Bank and program managed by Usio. Voyager claims the card will earn users up to 9% cashback, which makes me think they’re getting hit somewhere else, like trading fees. There is no annual fee and no rewards lock-up.

Credit Sesame, the free credit score app, continues to expand its move into banking services. The company previously launched a debit card/neobanking program and has launched a credit builder service that uses short-term credit (debit-like functionality) to build and report credit. Users acquire a Sesame Cash prepaid debit card and allocate a portion of funds to the credit builder service and create a secured line. There is enormous demand for credit-building debit card products, and the Credit Sesame program joins the like of successful programs such as Extra, Grow, Sequin, and others.

Happy Thanksgiving!

CardsFTW

Thanks for reading CardsFTW, a weekly-ish newsletter about all things debit and credit. CardsFTW is written and curated by Matthew Goldman, Chief Product Officer at Apto Payments. If you’re looking for insights into everyday payments beyond deal blogs, please subscribe for free at cardsftw.substack.com. If you enjoyed this, please share it with a friend! Follow me on Twitter @magoldman.