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Amazon threatens to derail the card network train with Venmo

The news that Amazon will now allow its US customers to make payments through Venmo alongside the card schemes at its checkout is momentous.

Amazon to derail card network train with Venmo

While Amazon already offers many payment card options from the likes of Visa, Mastercard, JCB and American Express, the addition of Venmo – a subsidiary of PayPal – can be seen as another challenge to the dominance of cards in online payments.

Following on from Amazon’s threat earlier this year to stop accepting UK-issued Visa cards on its platform in a row over interchange fees, the e-commerce giant appears intent to open up more fronts in its challenge to the card incumbents.

Although a deal between Amazon and Visa was grudgingly reached, to the relief of UK Visa cardholders, it’s clear that Amazon has every intent to whittle away at the card scheme transaction volumes passing through its platform.

As the Yearbooks show, the e-commerce battlegrounds across Europe comprise many different payment preferences from country to country – bank transfers like iDeal in the Netherlands and mobile schemes like Pivo in the Nordics show how alternative payment methods are challenging the incumbents.

But as is often the case, what happens in the US tends to be replicated in Europe not long after.

Boasting a customer base of 90 million, Venmo originally started life as a P2P platform but has been expanding into more consumer touchpoints over the past few years, including deals with Shopify.

Venmo will be in place as a payments option on Amazon by the peak sales event Black Friday, 25 November.

This is significant, because it is another shift in favour of non-card payments, and a broadening of the payment rail options in e-commerce.

Other combatants are entering the arena to take on the might of the card networks, and two heavy blows have been inflicted already.

Firstly, the US Federal Reserve has updated debit card processing rules to ensure that multiple debit card networks are available for routing transactions, including online payments.

Secondly, the Federal Trade Commission has announced an investigation into whether the networks’ token technology stifles processing debit card transactions on rival networks.

Visa and other payments cards have faced increased pressure about interchange fees as more shoppers embrace e-commerce, highlighting the increasing strength of retail giants.

Amazon certainly has the resources and cash to continue throwing punches at the card schemes, and we can expect the battle to intensify as interchange rows continue to play out over 2023. 

The Industry Bible of Payment & FinTech Intelligence

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