Walmart Canada Issues Visa Credit Card Ultimatum

Walmart Canada Issues Visa Credit Card Ultimatum

Walmart Canada has warned Visa that it will no longer accept transactions from the credit card issuer unless it lowers the fees on Visa purchases. According to a story by Jim Daly in Digital Transactions, the retail giant has given Visa until July 18 to do so, or it will no longer accept the card in its 400 stores across Canada.

Walmart Canada, Visa Have Time to Negotiate

Walmart will stop accepting Visa credit cards as of July 18 at its Thunder Bay, Ontario stores while the ban will carry over to other locations incrementally. Negotiations, however, will take place in the interim, leaving 34 days for a resolution.

What if a Resolution Cannot Be Reached?

Should the stalemate continue through the July 18 deadline, Walmart Canada has to consider how many Visa cardholders it is turning away, some of whom may not have another form of payment.

In a statement, Walmart said it “pays over $100 million in fees to accept credit cards each and every year. Lowering costs such as these is necessary for us to be able to keep our prices low and continue saving our customers money.”

Visa responded: “We regret Walmart’s decision to no longer accept Visa at its Canadian stores and the negative impact their decision will have on loyal shoppers across Canada. Walmart made this business decision despite Visa offering one of the lowest rates available to any merchant in the country. We are disappointed that Walmart chose to put their (sic) own financial interests ahead of their own consumers’ choice.”

More Questions for Walmart

It is commendable that Walmart is taking a stand, but it is likely to come out of this dispute as the bad guy. The retail giant is more visible, directly in front of the consumer while Visa is in the background of sorts as a mere credit card issuer. Will Walmart’s reputation weaken as a result of the impasse?

In 2014, Walmart issued a co-branded credit/debit card with MasterCard. Will its Visa-preferred customers migrate to Walmart’s MasterCard Rewards card?

Walmart’s History with the Card Brands

Walmart has quite a history with the major credit card brands:

  • In 1996, Walmart led a class action lawsuit against Visa and MasterCard over debit acceptance that resulted in a $3 billion settlement awarded to Walmart and its retailers. MasterCard paid the last of its share of the settlement in 2009.
  • Walmart recently filed a lawsuit against Visa, claiming the issuer is forcing retailers to use signature verification on debit transactions instead of routing transactions through Walmart’s pin-debit networks.
  • Walmart once discontinued accepting MasterCard debit transactions in the U.S., but the transactions only amounted to about 1 percent of sales.

What are your thoughts on Walmart Canada’s dispute with Visa? Leave us a comment below.

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