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News

Wal-Mart ends Visa debit New year, fresh start

moratorium in Canada A terse statement posted Jan. 5, 2017 on Wal-Mart's website
confirmed the company would once again accept Visa
cards at all Canada stores, beginning the following day.
"We have come to an agreement with Visa which allows
al-Mart Stores Inc. and Visa Inc. appear to us to continue offering Visa as a form of payment in our
have settled differences over PIN debit in [Canadian] stores. Customers in Manitoba and Thunder
the Canadian region, retail analysts noted. Bay, Ontario, will be able to use their Visa credit card
W The Green Sheet had previously reported on starting January 6, 2017," Wal-Mart stated.
Wal-Mart's May 2016 civil complaint against Visa in Issue
16:06:01, dated June 13, 2016. In a short interview with Bloomberg, Carla Hindman,
Head of Financial Education for Visa Canada, confirmed
Wal-Mart filed a complaint May 10, 2016, claiming Visa the ban would be lifted. "We have come to an agreement
opposed its PIN debit requirement for customers using with Wal-Mart through which Visa credit cards will be
chip-enabled debit cards at the POS. Visa claimed Wal- accepted at all Canadian Wal-Mart stores," she stated.
Mart's chip-and-PIN debit requirement violated its
processing guidelines. Pricing debates continue
As a global retailer, Wal-Mart remains concerned about
Wal-Mart spokesman Randy Hargrove said Mastercard interchange pricing in all world regions, retail analysts
had cooperated with the company's chip-and-PIN guide- noted. Some remarked that Wal-Mart has complained
lines, which he called a superior method of authentica- about fees in public statements and conferences. For
tion commonly used in other countries. He believes Visa example, the company took aim at all credit card brands in
prefers to route debit transactions through the company's a September 2016 press release, stating, "Walmart Canada
credit card networks because those transactions are billed pays [more than] $100 million in fees to accept credit
at higher payment card interchange rates. cards each and every year. Lowering costs such as these
is necessary for us to be able to keep our prices low and
Hargrove further noted that debit card transactions extract continue saving our customers money."
funds directly from consumer accounts, which entitles
debit transactions to lower rates due to their enhanced Payments analysts question how the frequently
security and guaranteed payment. "Visa nevertheless contentious relationship between Wal-Mart and Visa will
has demanded that we allow fraud-prone signature manifest in the United States and other major markets
verification for debit transactions in our U.S. stores around the world. The two companies are not always at
because Visa stands to make more money processing odds, however. They collaborated on an initiative to speed
those transactions," he stated. up chip-and-PIN transactions at the POS in April 2016.
Goliath versus Goliath Visa introduced new software, and Wal-Mart eliminated
a prompt that asked consumers to verify transaction
Hostilities escalated when Wal-Mart banned Visa cards at amounts. The net result reduced average transaction times
three of its Canadian stores in July 2016; the ban eventually by approximately 11 seconds, the companies stated.
affected 19 of the retailer's 409 locations in Canada.
Visa retaliated by launching a marketing campaign that
offered $10 and $25 credits to Visa debit cardholders Ecommerce drives
who used their debit cards at select retailers and grocery
stores located near Wal-Mart locations in Canada. Many global economic growth
participating retailers were small mom-and-pop stores,
Visa stated.
commerce may have a greater impact on eco-
Observers were fascinated by the fight between the nomic growth than physical goods in the post-
retail giant and major payment card brand. "They'll try industrial world, according to a new report
to paint the situation as David versus Goliath, but really E published in December 2016 by McKinsey
it's Goliath versus Goliath," Professor Brian Vendramin Global Institute. Digital globalization: The new era of global
stated in an interview with the Canadian news source flows found developing countries are using ecommerce
Sudbury.com. He added that the business community will platforms to participate in the international business com-
probably never know how the two companies arrived at munity.
an agreement. This appears to be the case, as neither Wal-
Mart nor Visa has shared details of the reconciliation. "Tens of millions of small and midsize enterprises
worldwide have turned themselves into exporters by
joining e-commerce marketplaces such as Alibaba,

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