Dive Brief:
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Wal-Mart Canada is making good on its threat to reject Visa credit cards and is no longer accepting Visa as a payment option in three Thunder Bay, Ontario locations, the Canadian Press reports. The ban will continue to roll out across all 400 Wal-Mart Canada locations, the retailer said.
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Wal-Mart Canada instituted the Visa ban after failing to reach an agreement on an “acceptable fee for Visa transactions,” according to a recent blog post.
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Wal-Mart and Visa both say that their differences may be soon resolved, and that an agreement would restore the payment option to Wal-Mart stores, the Canadian Press notes.
Dive Insight:
Wal-Mart Canada blames the Visa skirmish on “unacceptably high fees,” long a thorn in many retailers’ sides. Wal-Mart (like other retailers) says transaction fees translate to higher prices for consumers, although shoppers aren’t usually charged such fees outright; Wal-Mart Canada alone says it pays more than $100 million annually in card transaction costs.
While Wal-Mart Canada argues the clampdown on Visa cards is in the best interests of consumers, it’s actually quite a bold move to deprive customers of a payment option that in some cases could be their “top of wallet” or preferred credit card. In an open letter published last momnth in Canadian newspapers, Visa even accused Wal-Mart Canada of using its own customers as “pawns” in their ongoing dispute.
Such battles aren’t limited to Canada: Home Depot and Wal-Mart also have accused Visa of forcing retailers to conduct EMV chip-enabled card transactions that require cardholders to sign for purchases because these transactions yield higher fees than the more secure practice of using a PIN to close the transaction.
While Wal-Mart over the years has become famous for playing hardball with suppliers and rivals alike when it comes to price wars, retail futurist Doug Stephens recently told CBC News that both Visa and Wal-Mart will feel the effects of the retailer’s actions.
"At the end of the day, when we strip everything out of the debate, we're dealing with the potential that six out of 10 customers will come into a Wal-Mart store and be disappointed that they can't use their credit card," Stephens said. "Competition is extremely tough. This is not a good time to limit your consumer's ability to buy from you.”
