July 18, 2016
By Jim Daly
Wal-Mart Stores Inc.’s Canadian unit on Monday stopped accepting Visa cards at its three stores in Thunder Bay, Ontario, carrying out the threat the retailer issued last month in its dispute with Visa Inc. over card-acceptance costs.
A spokesperson at Wal-Mart’s Canadian headquarters in Mississauga, Ontario, as well as a manager at one of the Thunder Bay stores, confirmed to Digital Transactions News Monday morning that acceptance had indeed stopped, as Wal-Mart had said it would, on July 18. But the spokesperson says the two companies are talking.
“We remain optimistic that we will reach an agreement with Visa,” he says.
In an emailed statement, Visa Canada said “Visa remains committed to doing everything reasonable to ensure Canadians can use their Visa cards everywhere they wish to shop—including at Walmart stores. Until an agreement can be reached in this commercial dispute, we encourage shoppers to use their cards at the more than 5,200 stores in Thunder Bay that accept Visa.”
When it confirmed the planned Visa ban last month, Wal-Mart talked of a phased rollout that would start in Thunder Bay and expand nationally. But the spokesperson today would not say when or where discontinuance is slated next. Wal-Mart has about 400 stores in Canada.
Wal-Mart continues to accept the other major credit card brands in Thunder Bay, but in a country where Visa has 54 million cards, the retailer risks losing sales by shunning the card brand. Wal-Mart last month said it pays C$100 million (approximately $78 million U.S. at current exchange rates) to accept credit cards of all brands, and that it needs to lower those costs. “Following an evaluation of credit card transaction fees in Canada and the rest of the world, we have concluded the fees applied to Visa credit card purchases remain unacceptably high,” Wal-Mart Canada said in a statement.
On June 16, Visa posted an “open letter” saying that it recently “offered Walmart one of the lowest rates of any merchant in Canada. But Walmart is still demanding more. They believe that their cost to accept Visa cards should be much lower than all other merchants—lower than local grocery stores, pharmacies, convenience stores—and yes, charities and schools too. And they are using their size and scale to give themselves an unfair advantage.”
The Retail Council of Canada trade group is supporting a bill in Parliament that would empower the minister of finance to cap payment card interchange rates, similar to what governments in the European Union, United Kingdom, and Australia have done.
The Canadian dispute is playing out against a backdrop of merchant discontent in the United States about payment card acceptance costs and EMV chip debit card transaction routing. Wal-Mart recently sued Visa over EMV routing, prompting a Visa counterclaim in late June. The Kroger Co. also recently sued Visa, as did The Home Depot Inc., which also is suing MasterCard Inc.
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