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Amazon Just Dealt Visa a Blow. What Does It Really Mean for V Stock Holders?

As the holiday season approaches and retail catalyst such as Black Friday approach even faster, consumers are doing plenty of shopping on both sides of the Atlantic. Today brought some news that may make international e-commerce slightly more complicated, though. Amazon (NASDAQ:AMZN) announced today that after Jan. 19, 2022 it will no longer be accepting U.K.-issued Visa (NYSE:V) credit cards. This news has had V stock falling all day.

several Visa (V) branded credit cards

Source: Kikinunchi / Shutterstock.com

What’s Happening With V Stock

Visa stock has been on a gradual downward trajectory all day since the news broke, and shares closed down nearly 5%. It hasn’t been a great month for the company, either. In fact, V stock down 11% for that period. The news of the day has clearly posed a direct and negative effect on it.

Amazon, by contrast, is still in the green. While the stock hasn’t seen any serious growth recently, it also hasn’t seen any declines beside minimal downticks. Shares closed up 0.2% for the day.

Why It Matters

While it’s hardly surprising that a company like Amazon would be trading well, particularly as holiday shopping starts early this year, the fact that it’s up while Visa is down should serve as a good reminder of an underlying market truth. There’s very little that can touch Amazon.

Consumers can easily find new credit cards if they deem it necessary, as Amazon will still be accepting Mastercard (NYSE:MA) and American Express (NYSE:AXP). Finding a company that provides for their commerce needs is a bit more difficult. As they so often do, comfort and convenience will dictate how consumers respond to this news.

Investors shouldn’t ignore the further implications of this development for V stock, though. Amazon cited Visa’s rising transaction fees as the reason for its decision. When an industry giant makes a call such as this, other companies are likely to follow suit. Amazon is going to be fine, but unless Visa does something to reduce its fees, it’s will alienate itself from other large marketplaces, allowing its competitor to increase their own market shares in the process.

This isn’t even the first time that Amazon has taken a stand against Visa for its high fees. In August 2021, it increased fees for customers making purchase with Visa cards in Singapore, claiming such a maneuver was necessary to keep prices down for customers. Visa should have taken this as a warning sign.

What It Means

It will be interesting to see if Visa leans from this experience and moves to lower its fees. If it does, Amazon will have no reason not to retract its decision and business as usual can continue.

If it does not, though, the industry landscape will look grim as 2022 takes shape. As of now, it does not look like V stock is destined to take investors into the trillion-dollar club, despite some recent predictions.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2021/11/amazon-just-dealt-visa-a-blow-what-does-it-really-mean-for-v-stock-holders/.

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