Wal-Mart Canada Extending Visa Card Ban

by Raymond Pucci 0

Who will blink first—Wal-Mart or Visa? The staring match between the retail giant and the credit card network behemoth continues. Wal-Mart is expanding its boycott of Visa cards from 3 stores in Thunder Bay, Canada to an additional 16 in Manitoba as the following article relates.

Wal-Mart Stores Inc. said it would stop accepting cards from Visa Inc. in its 16 stores in the Canadian province of Manitoba on Oct. 24, representing an escalation in its fee fight with the card network.

The move comes after Wal-Mart stopped accepting Visa cards at its three stores in Thunder Bay, Ontario, in July. At the time, Wal-Mart said that it planned to roll out the program across Canada if the two companies couldn’t reach an agreement on fees.

“We are committed to continuing discussions, and we are still hopeful we can reach an agreement with Visa,” said Randy Hargrove, a Wal-Mart spokesman.

Visa said that Wal-Mart’s move was “disappointing” and that it “remains committed to actively working with Wal-Mart so that Canadians can use their Visa cards wherever they wish to shop.”

Wal-Mart employees will start posting signs Thursday in the affected stores so customers will be aware of the change, he said. The retailer has seven stores in Winnipeg, which is the capital of Manitoba. Wal-Mart has more than 400 stores in Canada and nearly 12,000 globally.

Wal-Mart has up the ante by extending the Visa boycott in October to the higher shopper-traffic Winnipeg area of Manitoba. Apparently, their initial action in three Thunder Bay stores has had a negligible impact on store sales. Despite Visa’s large cardholder base, shoppers have many other choices, not the least of which is Canada’s popular Interac debit card network. The real test will be the holiday shopping season where merchants typically generate about 50% of their annual profits. If Wal-Mart finds the Manitoba Visa boycott did not affect holiday sales, then the pressure will shift to Visa to offer a better payments transaction fee deal to Wal-Mart.

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

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