Open banking features heavily in the financial press, but we don’t often see the term popping up among mainstream headlines. That changed this week, though, as web giant Amazon gave credit-provider Visa a red card in a row over the latter’s transaction fees. Amazon UK says that from 19 January 2022, it will no longer accept payments from Visa credit cards. Given the transaction volumes at stake and the likely consequences for Amazon customers, the spat has captured attention across traditional and online media. Visa claims to be “…very disappointed that Amazon is threatening to restrict consumer choice…”. The company also says that it is trying to find a solution that will let Amazon customers pay with their Visa credit cards. Meanwhile, although Amazon has described its own decision as “inconvenient”, the company also labelled higher card payment costs as “an obstacle for businesses”. Commenting in the Financial Times, Andrew Cregan, payments policy adviser at the British Retail Consortium, decried the increased charges as “anti-competitive”. There’s every chance that the disagreement will rumble on for some time to come, but what does it mean for new payment methods and the fintech companies behind them?
Will fintech finesse online transactions?
Many industry insiders are unsurprised by Amazon’s decision, viewing it as a herald of things to come. In addition, they see it as a chance for services such as direct account-to-account payments to step in and take up the slack. Our own Hassan Peymani, Head of Transaction Transform, commented “Short term, the customer will suffer, but as an advocate for open banking and associated microservices, I’m excited about the potential of direct account-to-account payments”. Providers that can offer these payment methods exist because of the UK’s new open banking legislation, which was introduced in an attempt to make the banking industry more innovative and competitive. For more info on the history of open banking in the UK, you can read the first article in our Opening up about open banking series here.
Microservices can make waves
Microservices and application programming interfaces (APIs) are disrupting the payments sector on a significant scale. By coming up with innovative payment services, like paying for goods by withdrawing funds from one bank account and directly crediting another, they are transforming transactions around the world.
If and when Amazon and Visa will kiss and make up is not clear. What is obvious, however, is that their feud will bring new payment technologies into the spotlight. It could be an open door for open banking and innovative microservices.