Walmart Limited Visa Ban Begins Today

by Raymond Pucci 0

Nobody has blinked, so today Walmart starts its ban on Visa cards at three stores in Thunder Bay, Ontario. While the two giants have been skirmishing for a while, some retail observers had hoped a settlement could have been reached by now. The following article outlines the dispute.

MONTREAL ¬– Walmart’s threat to ban the use of Visa cards at its Canadian stores gets underway today in the northwestern Ontario city of Thunder Bay. After months of negotiations, the retailing giant is eliminating Visa as a payment option at three stores in Thunder Bay, vowing to roll it out to its 400 locations in Canada. Walmart hasn’t disclosed when that rollout will begin.

Despite the impasse, Walmart says it remains optimistic that an agreement will eventually be reached with Canada’s largest credit card company. Visa, meantime, says it will do everything “reasonable” to ensure Canadians can use their Visa cards everywhere they want to shop, including at Walmart stores.

Visa last month accused Walmart of using consumers as pawns in its battle over merchant fees with its threat to ban the popular credit card. Walmart says it pays more than $100 million in fees annually for customers using credit cards like Visa, MasterCard and Discover. Visa defended itself, saying it offered Walmart one of the lowest rates of any merchant in Canada. But it said the world’s largest retailer wanted more ¬¬ costs that would be lower than local groceries, pharmacies, convenience stores, charities and schools.
The Retail Council of Canada has called on the federal government to intervene to mandate lower fees for all merchants. A spokesman for Finance Minister Bill Morneau says he’s waiting to receive a report on a 2014 voluntary 10% fee reduction by Visa and Mastercard before deciding “how we can ensure this market stays competitive in the future.” A recent poll suggested Walmart was winning the public relations battle with Visa ¬¬ but with a potential cost.

Both sides have dug in their heels in this battle of the payment fees. Walmart appears to have chosen these three Ontario stores to test the waters with its customers as well as to fire a salvo across the bow of Visa. There are another 400 Walmart stores in Canada that will be phased into this ban. Walmart and Visa both have bargaining chips on the table and are prepared for the long haul. Hopefully an agreement can soon be reached so that payment choice decisions can be made by the missing stakeholders in this dispute—the paying customers.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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