Walmart has announced that in it’s Canadian stores it will gradually stop accepting Visa as a payment method due to the fees applying to these transactions being unacceptably high. Thunder Bay stores will be affected first, starting on July 18th those stores will no longer accept Visa as a payment method and this will slowly be rolled out nationwide. The following payment methods can be still be used:
- cash
- Interac debit
- MasterCard
- Discover
- American Express
They also started that currently they are paying $100 million a year in fees to accept credit card payments. Normally retailers will pay anywhere from 1%-3%+ to accept credit card payments, depending on the payment network, card type & retailer involved (retailers at higher risk of fraud are charged higher fees for example). Typically American Express have charged (and continue to charge) the highest fees in most cases. Large retailers such as Walmart are able to negotiate special deals directly with the major payment networks because they are doing so much in volume (as evidenced by the $100 million in fees they are currently paying). Costco famously used this to their advantage in striking their new deal with Visa & Citibank.
Visa have stated that:
“Walmart made this business decision despite Visa offering one of the lowest rates available to any merchant in the country,” a Visa spokeswoman said in a statement. “We are disappointed that Walmart chose to put their own financial interests ahead of their own consumers’ choice.”
In the last line of the Walmart press release that they remain optimistic that they will be able to reach an acceptable deal with Visa. In my mind this is simply Walmart putting pressure on Visa to lower their fees by publicly announcing this change. I think we’re likely to see Visa & Walmart reach a deal before Thunder Bay stores are affected.
Will This Affect The U.S.?
If the change does go ahead, it’s possible that they could implement something similar in the U.S. But Walmart does issue a Visa Moneycard (along with the American Express bluebird & Mastercard credit card. Their Discover card has been discontinued). Visa will be eager for Walmart to keep accepting their cards as it likely presents significant revenue for them and convenience for their cardholders. It wouldn’t be surprising to see American Express to make a play for only their cards to be accepted, to try and replace lost revenue and exclusiveness from their Costco deal but the target market of Walmart is unlikely to hold an American Express card.
