September 15, 2016
By Jim Daly
The dispute between Wal-Mart Stores Inc. and Visa Inc. over payment card acceptance costs intensified Thursday when the retailer’s Walmart Canada unit announced that it will extend its ban on Visa credit card acceptance from Thunder Bay, Ontario, to its 16 stores in the province of Manitoba.
The expanded ban will begin Oct. 24. Wal-Mart stopped accepting Visa credit cards in its three Thunder Bay stores July 18. Winnipeg, Manitoba’s capital and by far its largest city, and its suburbs have seven Walmarts.
“Walmart’s purpose is to save customers money so they can live better,” says a statement on Walmart Canada’s Web site. “We are committed first and foremost to this purpose, which requires us to keep costs as low as possible. To ensure we are taking care of our customers’ best interests and delivering on our promise of saving customers money, we constantly work to reduce our operating costs, including credit card fees. Unfortunately, Visa and Walmart have been unable to agree on an acceptable fee for Visa transactions.”
As it said earlier, Walmart Canada reminded customers that it spends more than C$100 million a year ($76 million) to accept credit cards. The retailer will continue accepting Interac debit cards as well as MasterCard, American Express, and Discover credit cards.
“Walmart’s decision to further limit Visa acceptance in Manitoba is disappointing,” a spokesperson for Toronto-based Visa Canada said in an emailed statement. “We know from our experience in Thunder Bay that consumers want the option to use the payment method of their choice when shopping—including at Walmart stores. Visa remains committed to actively working with Walmart so that Canadians can use their Visa cards wherever they wish to shop.”
Walmart Canada has 405 stores, so even with the expansion to Manitoba the ban will affect only 5% of its locations.
A spokesperson for Mississauga, Ontario-based Walmart Canada tells Digital Transactions News that the company is still talking with Visa about resolving the cost issue. “We’re committed to continuing negotiations with Visa, and we remain hopeful we can reach an agreement with them,” he says.
Some observers speculated in August that the Visa ban wasn’t going well for Wal-Mart and that not accepting the world’s largest credit card brand would hurt the retailer’s sales. But the Walmart Canada spokesperson says “the results we are seeing in Thunder Bay are better than expected. Customers have adopted alternative forms of payment.” One of those is a cobranded MasterCard issued by Walmart Canada Bank.
Walmart Canada said before the Thunder Bay ban began that it would expand its boycott in phases if it doesn’t reach an accord with Visa. The spokesperson would not say when or where the next expansion would be. “We’re not rushing, we’re rolling out in phases,” he says.
The Visa spokesperson refused to say how much Visa credit card volume has gone down in Thunder Bay since the ban started. The network began a marketing campaign early in the summer reminding consumers in the city of the 5,000 other local places their could use their Visa cards and which included promotions with grocery stores.
SPECIAL FEATURERead Digital Transactions Online