Wednesday, January 11, 2017
Walmart filed a complaint May 10, 2016, claiming Visa opposed its PIN debit requirement for customers using chip-enabled debit cards at the POS. Visa claimed Wal-Mart’s chip-and-PIN debit requirement violated its processing guidelines.
Wal-Mart spokesman Randy Hargrove said Mastercard had cooperated with the company’s chip-and-PIN guidelines, which he called a superior method of authentication commonly used in other countries. He believes Visa prefers to route debit transactions through the company’s credit card networks where they are billed at higher payment card interchange rates.
Hargrove further noted that debit card transactions extract funds directly from consumer accounts, which entitles debit transactions to lower rates due to their enhanced security and guaranteed payment methods. "Visa nevertheless has demanded that we allow fraud-prone signature verification for debit transactions in our U.S. stores because Visa stands to make more money processing those transactions," he stated.
Hostilities escalated when Wal-Mart banned Visa cards at three of its Canadian stores in July 2016; the ban eventually affected 19 of the retailer's 409 locations in Canada. Visa retaliated by launching a marketing campaign that offered $10 and $25 credits to Visa debit cardholders who used their debit cards at select retailers and grocery stores located near Wal-Mart locations in Canada. Many participating retailers were small mom-and-pop stores, Visa stated.
Observers were fascinated by the fight between the retail giant and major payment card brand. "They'll try to paint the situation as David versus Goliath, but really it's Goliath versus Goliath," Professor David Vendramin stated in an interview with the Canadian news source Sudbury.com. He added that the business community will probably never know how the two companies arrived at an agreement. This appears to be the case, as neither Wal-Mart nor Visa has shared details of their reconciliation.
A terse statement posted Jan. 5, 2016, on Wal-Mart's website confirmed the company would once again accept Visa cards at all Canada stores, beginning the following day. “We have come to an agreement with Visa which allows us to continue offering Visa as a form of payment in our [Canadian] stores. Customers in Manitoba and Thunder Bay, Ontario, will be able to use their Visa credit card starting January 6, 2017,” Wal-Mart stated.
In a short interview with Bloomberg, Carla Hindman, Head of Corporate Communications for Visa Canada, confirmed the ban would be lifted. “We have come to an agreement with Wal-Mart through which Visa credit cards will be accepted at all Canadian Walmart stores,” she stated.
As a global retailer, Wal-Mart remains concerned about interchange pricing in all regions of the world, retail analysts noted. Some remarked that Wal-Mart has complained about fees in public statements and conferences. For example, the company took aim at all credit card brands in a September 2016 press release, stating, “Walmart Canada pays [more than] $100 million in fees to accept credit cards each and every year. Lowering costs such as these is necessary for us to be able to keep our prices low and continue saving our customers money.”
Payments analysts question how the frequently contentious relationship between Wal-Mart and Visa will manifest in the United States and other major markets around the world. The two companies are not always at odds. They collaborated on an initiative to speed up chip-and-PIN transactions at the POS in April 2016. Visa introduced new software, and Wal-Mart eliminated a prompt that asked consumers to verify transaction amounts. The net result reduced average transaction times by approximately 11 seconds, the companies stated.
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