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Citing ‘Unacceptably High’ Fees, Walmart to Stop Accepting Visa Cards in Canada

Citing ‘Unacceptably High’ Fees, Walmart to Stop Accepting Visa Cards in Canada

Citing ‘Unacceptably High’ Fees, Walmart to Stop Accepting Visa Cards in Canada

The past Saturday, an important announcement has been issued by Walmart Stores Inc.’s 400-store Canadian chain, stating that it will no longer accept Visa payment cards in its stores, beginning with phase discontinuance starting July 18th.

In a statement issued by the company, it was said that having evaluated the credit card transaction fees in Canada and the rest of the world, Walmart has ultimately concluded that the fees applied to the Visa card purchases remain unacceptably high. They assured the decision was taken with their customers in mind, as they care about their best interests, and they continuously work to reduce costs to the bare minimum, including credit card fees. Furthermore, they even revealed the exact amount of money they pay annually to accept credit cards, which is C$100 million. The discontinuance phase will start in Thunder Bay, Ontario, on July 18, and then it will gradually spread into other areas of the country.

However, not only the ‘good will’ of the company to protect their clients interests, may have influenced their decision. According to Adam Atlas, a Montreal-based attorney who works with U.S. and Canadian payment clients, another factor may have been revenue issues. Walmart, through its Walmart Canada Bank unit, has issued a MasterCard Inc. cobranded card since 2010. In 2014, Walmart also switched its U.S. card portfolio to the MasterCard brand from Discover Financial Services.

Atlas then proceeds to speculate about the real reason behind the decision and questions how does the large retailer benefit from issuing cobranded cards, and formulates the question of whether this is another way reducing acquired costs and also getting more issuing profits. He further addresses the fact that customers in Canada who have always used their Visa cards will not be very pleased about the whole thing.

No one knows for sure how long the whole feud is going to last, but there are still five weeks left before Walmart makes the final decision. Meanwhile, Visa Canada has spoken against Walmart’s decision, saying that it will have negative impact on their customers, even going as far as saying that “Walmart chose to put their own financial interests ahead of their own customers”. Certainly some big words.

But Visa’s statement is actually pretty spot-on, as the move holds the potential of hurting Walmart’s sales. The action recalls the time when Walmart briefly stopped accepting MasterCard-branded debit cards in the U.S., but industry experts estimated that MasterCard debit transactions accounted for only about 1% of Walmart’s sales at the time. The MasterCard dust-up was one chapter in Walmart’s long-standing dispute with Visa and MasterCard over debit acceptance costs and rules that dated back to a 1996 class-action lawsuit led by Walmart. The networks and merchants settled the case in 2003 for about $3 billion.

 

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