Dive Brief:
- Grocery store chain Kroger has become the latest retailer to sue Visa, alleging Visa threatened to raise debit card fees after Kroger accepted PIN-based debit card transactions that were routed through an alternate payments network.
- Kroger reportedly has been fined $7 million by Visa, which is trying to force the grocery store chain to use only the Visa card network for payments.
- The filing of the lawsuit appeared to help boost Kroger's stock price during an otherwise difficult day for the stock market, according to The Street.
Dive Insight:
The longstanding battle between retailers and credit/debit card networks has reached a whole new level in recent weeks. The details of the dispute between Kroger and Visa appear to be pretty similar to those that drove Home Depot to sue both Visa and MasterCard, and Wal-Mart to sue Visa.
Like those scenarios, card transaction fees are part of the issue, but the bigger issue is that retailers feel that card networks are forcing them to lower security standards by making them accept customer signatures on card payments using EMV chip-based payment terminals, rather than allowing them to accept payments authenticated with customer PINs.
Retailers such as Wal-Mart have pointed out that Visa earns about five cents more per transaction if a customers signs for authentication instead of using a PIN. That five cents surely adds up quickly: Kroger, for example, accepted about $29 billion in Visa debit card transactions last year across its 2,700 or so stores.
However, we live in an infinitely more security-sensitive world than we lived in even a few years ago. Security threats are constan,t and successful attacks have hit some retailers very hard. How many lawsuits is it going to take for Visa to adjust to this new reality, and realize that securing customer transactions to the highest degree possible should be the goal of both retailers and card networks?
