Walmart announced that all its Canadian stores will stop accepting Visa Cards since July 18. More than 400 stores will now accept only MasterCard, American Express, and Interac debit.
The giant retail seller is now the third company that will stop accepting Visa, along with Costco and No Frills. According to Walmart authorities, the fees related to Visa cards transactions are too expensive. On the other hand, Visa’s response was that the lowest rates available were offered, although an agreement was not achieved.
Fees are assessed net of refunds and chargebacks, and the percentage of the rates is different for each retailer since it depends on the agreements each company achieves with the credit cards providers. Fees of transactions are different that credit card rates for users.
How expensive are the fees?
Walmart Canada stated that they pay about $79 million in credit card fees every year, which to the company is an unacceptably high cost. The costs of the rates of each transaction are confidential since the agreement between the credit card company, and the retailer is a closed document.
Canadian retailers complained about the high rates for an extended period. Since the complaints almost ended in Government intervention, Visa and MasterCard stated in 2014 that they would review the transaction rates for Canadian stores. The final rate was about 1.5 percent.
Both Visa and MasterCard have different rates and fees to the merchants depending on the credit card type or status, while other companies, like American Express, negotiates a flat fee.
— CP24 (@CP24) June 11, 2016
The restriction will be rolled out in phases
Stores located in the northwestern part of the Ontario will be the first to stop accepting Visa cards. Then, progressively, the restriction will be implemented in the rest of the Canadian Walmart stores, that are about 370.
The change will undoubtedly affect Visa clients, a major concern for the credit card company since this decision can be translated into a relevant amount of customers not using Visa anymore.
U.S. stores will not be affected by this decision.
More about the companies involved
Walmart is one of the major retail corporations in North America, that operates a chain of markets and more than 11,000 department stores, and grocery stores, in 28 countries.
In Canada, the company started operations in 1994 buying Woolworth Canada, Inc’s 122 stores. In 2015, it employs almost 90,000 people.
Visa Inc, on the other hand, is an American financial services corporation that works with credit and debit cards, and electronic funds all over the world. It was founded 58 years ago. The transaction volume of the company is over the $6 trillion, and it has about 11,000 employees.
Source: The Guardian