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Visa Stock Slumps After Amazon Says It Won't Take UK-Issued Credit Cards

Amazon said it won't take UK-issued Visa cards as a form of payment, starting from next year, as a result of "continued high cost of payments" from the world's biggest issuer.

Visa  (V) - Get Visa Inc. Class A Report shares slumped lower Wednesday after retail giant Amazon  (AMZN) - Get Amazon.com, Inc. Report said it would no longer accept credit cards issued in the United Kingdom due to the high fees it charges on payments.

Starting in mid-January of next year, Amazon.co.uk will no longer allow U.K.-issued Visa cards as a form of payment, although debit cards will still be permitted, the company said. Amazon's decision echoes a similar dispute with U.S.-based grocery group Kroger  (KR) - Get Kroger Co. Report in 2019.

"Amazon is not entirely oblivious to customer preference, and it is merely doing to Visa what it has done to many before it – leveraging its size to attain its goals, which in this case is a reduction in the card fees,” said Chris Beauchamp, market analyst at IG in London. 

Visa shares were marked 5.5% lower in mid-day trading Wednesday to change hands at $203.50 each, a move that would extend the stock's six-month decline to around 10%.

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Last month, Visa posted stronger-than-expected fourth quarter earnings of $1.65 per share, as payment volumes rose 17% from last year and total transactions surged 21% to $45.3 billion amid a recovery in international travel and the broader post-pandemic rebound. 

Earlier this year, reports indicated the U.S. Department of Justice was investigating Visa over allegations that limited the ability of merchants to route debit card transactions in order to limit so-called 'network fees'.

Visa, which operates the largest card network, was thwarted by the DoJ earlier this year in its attempt to purchase fintech start-up Plaid for $5.3 billion.

The DoJ had argued that is "a monopolist in online debit, charging consumers and merchants billions of dollars in fees each year to process online payments". Assistant Attorney General Makan Delrahim called the merger collapse "a victory for American consumers and small businesses." 

The Wall Street Journal also reported in October that the DoJ expanded its antitrust probe by looking into Visa's relationship with fintech companies, specifically the kinds of incentive payments it had offered Square  (SQ) - Get Block Inc Class A Report and PayPal  (PYPL) - Get PayPal Holdings, Inc. Report.