
Walmart Canada stops accepting Visa cards - jackgavigan
http://www.walmartcanada.ca/newsroom/press-releases/2016/06/11/walmart-canada-statement-regarding-visa-credit-card-purchases
======
ced
Dear HN, I'd like to fact check my outrage...

If I understand correctly, credit card terms forbid stores from offering two
different prices (one for paying with and one for paying without), because if
they didn't, some stores would offer a 2-3% discount for cash, and customers
would switch to cash. Meanwhile, most people I've spoken with are happy with
the system, because they feel like they're getting money back for free through
cashback/reward programs, so credit card companies are incentivized to keep
increasing their merchant fees so that they can give more money back to their
customers. Restaurants/shops that don't accept credit get less customers, and
are forced into the system as well. While the government could do something
about it, they don't because they can track every credit card transaction (->
tax revenue), but they can't track cash. And cash-paying customers get to pay
the 2-3% "credit card tax" on every transaction, which is so ridiculously
backward.

I hope Walmart's decision snowballs.

~~~
morgante
> I hope Walmart's decision snowballs.

Why?

The alternative would be that companies either don't accept credit cards at
all (inconvenient) or charge an extra 2-3% for credit card purchases.

I don't see how that is any fairer than forcing cash customers to pay the full
price as well. Somebody is losing either way, and I see absolutely no reason
that cash should be privileged.

~~~
criddell
> I see absolutely no reason that cash should be privileged

It seems reasonable that the costs associated with the various payment methods
can be passed on to the consumer that chooses that method.

~~~
ebrenes
It would seem reasonable if that could be applied consistently to all payment
methods.

If I decide to use digital currency could I opt out of all the associated
costs related to cash? Including printing it, shipping it, storing it,
transporting it, counting it and other aspects that a digitized monetary
transaction automatically handles?

------
mabbo
Just so folks understand: in Canada (actually, pretty much everywhere but
America) every bank issues it's own non-credit-card affiliated debit card that
can be used to pay for things at stores (or get money at the ATM). So this is
annoying, but not a huge deal.

I'll get to the cash, get told "sorry, no visa", and take out my debit card to
pay that way instead. Really not a big deal.

It's just Walmart annoying their customers to try to prove some point to Visa.

~~~
douche
Except its still a debit card, with all of the problems of debit cards, and
none of the additional protections you get from using a credit card.

Somebody steals your credit card and goes on a spree? Call your bank, dispute
the charges, and life goes on.

Somebody steals your debit card? Good luck, money is gone from your bank
account, and BTW, your mortgage and auto payments just bounced, so we're going
to tack on some overdraft fees too. Have a nice day.

~~~
peeters
> Somebody steals your debit card? Good luck, money is gone from your bank
> account

I had $4000 stolen from my bank account via a compromised debit card. The
charges were reversed the same day. The bank is still liable for fraudulent
transactions if you didn't authorize them.

~~~
brianwawok
It's a classic case of who is carrying the burden.

With credit it's he bank. Fine show my account balance 4k high, I refuse to
pay my bill.

Same thing with debit and it's my cash missing, and I need to go through a
dance to get my own cash back.

In fact just had a CC stolen last week. No harm to me because I wasn't holding
the burden.

I refuse to use my debit card for anything but at an ATM.

~~~
theonemind
My bank issued me a debit/ATM card by default. I asked, and they replaced it
with a plain ATM card that's not a debit card.

They also had this insecure-dy-default behavior allowing checking account
overdraws to start pulling out of savings. It's worth checking that setting,
too.

~~~
jdeibele
I was interested to read in the comments on a different topic that businesses
typically have a deposit-only account, a withdrawals-only account and an
account in the middle.

As a family, we set up an extra account at Schwab to write checks and do
automatic payments against. There wasn't any additional cost to us - having
some money sitting in the account is hardly worth worrying about with what
Schwab (or anyone else) pays in interest.

The big benefit to me is that the account doesn't have over-draft protections.
I have to manually move money into the account from a different account where
paychecks, etc. go into. That account can't write checks, etc.

If our account is compromised, well, we lose (temporarily, I hope) what's in
there but not the cash that accumulates to pay for property taxes, etc.

~~~
astrange
Wells Fargo had me set up an extra checking account for this. Of course, the
real reason is so they could charge me another $10 a month for it.

------
thought_alarm
In Canada, direct debit is by far the most popular payment method (it over
took cash over 15 years ago) and Visa plays no role in direct debit purchases.
100% of all direct debit transactions are handled by the ubiquitous Interac
network, not Visa or MasterCard, and everyone with a bank account has an
Interac card.

So, while dropping Visa is still kind of a big deal, it's not quite as big a
deal as it would be in other countries where Visa handles both credit and
debit purchases. Certainly Walmart will know how much Interac is used over
Visa.

But here's the thing. Interac has no rewards program, and it charges the
consumer a flat fee with each transaction ($0.15 I think? I don't know, I
stopped using Interac 15 years ago). Yet, Interac is hugely popular.

Meanwhile, we're all paying a hidden 2% tax on everything to cover the credit
card interchange fees whether we use a credit card or not. It's a completely
unacceptable situation and it's hard not to be on the side of the side of the
retailers (even when they propose ham-fisted solutions like CurrentC).

~~~
marxidad
I don't think any fees are charged any more for using direct debit.

~~~
orbitur
I'm in Canada, I've wandered into a few convenience stores in the last year
that still tack on 25 or 50 cents if you use debit. No extra charge if you use
Visa/MC or cash, though.

~~~
DKnoll
They're actually violating the terms of their payment processor by doing so,
but some small shops don't care.

------
sandworm101
Rail against the credit card companies if you want, but realize this is
Walmart, not an orphanage. This story is part of a negotiation between Walmart
Canada and Visa. They want outrage. They want us to get mad. They want this on
CNN (not likely considering what just happened). Public outrage puts pressure
on Visa to cut them a better deal. Walmart admits the intention to cut a deal
eventually. Let the heavyweights fight it out amongst themselves. I choose not
to participate in the farce.

~~~
cmurf
It is rather about which party is going to get their "cut" of the payment
action. I doubt Walmart's prices go down by 2.7% if they were to renegotiate
credit card fees to be the same as debit card fees. But regardless I think the
crying foul is overall better because people should know that credit card fees
are excessive, and maybe they should pay more attention.

I'd prefer it if merchants could and would line item the exact fee for my
specific card for this specific transation, as a line item, just like sales
tax.

~~~
notatoad
>I'd prefer it if merchants could and would line item the exact fee for my
specific card for this specific transation

that would be excellent, and as a merchant i'd love if it were possible. we
save a lot of money by paying a variable rate, so a transaction on a platinum
card or something that pays a higher cashback to the cardholder costs us more
than a basic card. We don't even know what the processing fee for your
transaction was until the end of the month when our gateway provider invoices
us.

~~~
mvid
It would probably be the other way around, less expensive cards have a higher
likelihood of fraud, so they would be charged a higher fee.

~~~
notatoad
it is not. risk is covered through the interest rates the cardholder gets
charged - higher risk cards are higher interest. Reward program costs are paid
by the transaction fee the merchant gets charged.

------
eggy
Good for Walmart!

I was one of the hopeful for a Bitcoin, or another blockchain-based currency,
to cut out the middleman, all the while maintaining the convenience of
spending my money as I see fit. The middleman are the 5 to 7 companies that
touch a credit card transaction from POS to the bank, each taking a small cut.
I am confident most HNers probably already know.

Unfortunately the door didn't shut on big credit/transaction processing/bank
asses fast enough, so all them have developed blockchain-based instruments to
ensure they get a cut of any future transaction that flows. Short of a sudden
worldwide adoption of Bitcoin by merchants and consumers overnight, this does
not appear to be happening (fingers crossed), I am not sure how the market
will take care of the fee situation; I'm not fond of government regulation via
caps, since it will hinder other creative efforts to change the system; the
disparity is what will drive an innovation (I hope). I think a player willing
to take less would start a price war and gain more volume.

The passivity of acceptance of these fees by the majority of consumers without
any noise, is similar to how regular paycheck income tax withdrawals are like
bleeding people drop by drop; they don't seem to care too much. As opposed to
saying, 'Hey we'll take that 28%' all in one chunk on April 15th. People would
revolt, or get very angry ;)

So I think it is cool that a big player is shaking up the sleeping giant of
VISA and company. I will follow this to see how quickly VISA cuts a deal. I
think the Walmart letter paints them against VISA in a good light. In any
case, it has brought scrutiny and public awareness to the issue.

~~~
germanier
Bitcoin still has a middleman – namely the miners that are getting paid
directly through transaction fees and indirectly through inflation. Sure, it
might be cheaper overall (which is not a given when you would dramatically
increase transaction volume) but don't delude yourself thinking it cuts the
middleman out completely.

~~~
imglorp
Right. It's around us$0.05/transaction. First of all, it's lower, and second,
it's a flat charge instead of a percent, which is probably more fair for
users.

~~~
ufo
Bitcoin is heavily subsidized via newly minted bitcoins that are awarded to
miners. The real cost per transaction is closer to $10.00

[https://blockchain.info/charts/cost-per-
transaction](https://blockchain.info/charts/cost-per-transaction)
[http://bitcoin.stackexchange.com/questions/32923](http://bitcoin.stackexchange.com/questions/32923)

------
downandout
It says:

 _...Visa and Walmart have been unable to agree on an acceptable fee for Visa
transactions. As a result we will no longer accept Visa in our stores across
Canada, starting with our stores in Thunder Bay, on July 18, 2016.....We
sincerely regret any impact this will have on our customers who use Visa and
remain optimistic that we will reach an agreement with Visa._

This is nothing more than a negotiating ploy to get Visa to cave to Walmart's
demands before July 18. No major retailer can afford to stop taking Visa. They
may take the hit and carry through with it for a while just to show Visa
they're serious, but it won't last very long.

~~~
pipio21
"No major retailer can afford to stop taking Visa."

That remembers me Steve Jobs, the iPad and flash, when he decided to remove
flash video. I recall so many people saying "nobody could tell that to the
people, people will demand flash, Apple is screwed".

Turns out they could. Your website needs flash? fine, my millions of high
income iPad users wont be able to see it.

Wallmark is not a major retailer, it is THE BIGGEST RETAILER in the world!!

By the way, if Wallmark wants they could "help" people transition to Apple or
Google pay. Everybody has a smartphone and the only thing is needed for people
to use it for paying is getting used to it.

Wallmark knows now alternatives exist so they can exert some negotiation
power.

~~~
JoeAltmaier
Spoken like a Silicon Valley kid. In my town, nobody uses anything but cash or
card at WalMart. And I don't see how phone vs pad is meaningful here - I'm not
browsing WalMart, I make the decision to go there or somewhere else before I
even get in the car. And if they can't take my money, I won't go there. No
chance for them to help me/ coerce me to do anything.

~~~
philliphaydon
There's other forms of payment than cash/card???

~~~
PhantomGremlin
_There 's other forms of payment than cash/card???_

A long time ago people would routinely slow down lines at supermarket
checkouts by performing this ritual:
[https://en.wikipedia.org/wiki/Cheque](https://en.wikipedia.org/wiki/Cheque)

I don't really know how common it is in retail nowadays. It's certainly
preferable to card for high value payments. E.g. try paying income tax or
property tax by card. It will cost you a certain % extra in fees.

Edit: I forgot about this famous check. Happened a few years ago. I wish _I_
had the assets to be able to hand-write a check for $975 million:
[https://www.washingtonpost.com/news/post-
nation/wp/2015/01/0...](https://www.washingtonpost.com/news/post-
nation/wp/2015/01/09/ex-wife-of-oil-tycoon-harold-hamm-cashes-previously-
rejected-975-million-check/)

------
BlackJack
"To keep prices low we continuously assess opportunities to lower our
operating expenses...

Customers will continue to be able to use...American Express."

Thought this was funny given that Amex must have the highest interchange &
fees. Their statement still makes sense because Walmart is saying Visa fees in
Canada are too high compared to their rates in other markets.

Maybe Target will win some market share, but I doubt it. I think customers
will switch cards or go cash. Walmart is too good at what they do.

~~~
ssharp
AMEX could negotiate their transaction fees down, right? Walmart is very well
known for playing hardball with suppliers, so maybe they give credit card
companies "take it or leave it" offers as well.

~~~
MissingGear
Costco Canada dropped Amex two years ago [1] and I was stuck with an Amex card
which is not as widely accepted as Visa or Mastercard. Amex tried/are trying
all kind of tricks to not have these cards closed. The best one yet was zero
percent for one year - I had colleagues max the card and put that money in
their savings account just for the one year interest.

You bet that Walmart negotiated an excellent rate with Amex.

[1] [http://www.moneysense.ca/spend/credit-cards/costco-
american-...](http://www.moneysense.ca/spend/credit-cards/costco-american-
express-part-ways)

~~~
forgetsusername
> _I had colleagues max the card and put that money in their savings account
> just for the one year interest._

I'm skeptical, since "cash advance" usually has its own stipulations regarding
interest rates, and is capped below your credit limit. All for, what, $150
annually per $10,000 in arbitrage? That's an hour of work for many people
here.

~~~
ssharp
Before the housing crash and subsequent credit tightening and lower interest
rates, you could get 5% on a standard savings account. That, coupled with
negotiating no fees on a 0% balance transfer check could was more lucrative. I
can't imagine it being worth the hassle and short-term credit hit for the
paltry savings rates today.

------
GreaterFool
I lived in Singapore and I still have a bank account there. A year ago my bank
bumped foreign transaction fees on credit cards to 3.5%. This is a robbery. I
immediately cancelled that card. I recall the website said the most of the fee
is what Visa (or Mastercard) imposes on them. Either way that's not
acceptable.

~~~
_delirium
In the U.S., Visa charges banks a 1% foreign-transaction fee. However most
banks in turn charge their customers either 2-3% (tacking on another 1-2%
themselves), or on more premium cards, eat Visa's fee and charge the customer
0%, while advertising it as a "no foreign transaction fee card".

~~~
GreaterFool
I saw a couple of American Express cards in US with no foreign transaction
fees. As an expat and nomad I really wanted to get one of them. Unfortunately
no financial services in US are available no non-residents __* (bank accounts,
stock trading accounts, robo advisors, credit cards, etc)

 __* please don 't complain that jobs and profits are going abroad if your
country won't do business with foreigners. It is often hard to order products
from US because almost nobody ships abroad (Amazon does, but not all
products). Anyway, this is off topic, sorry about that.

~~~
rizwank
They are available to non residents; but only if they were allowed to get an
SSN.

------
peeters
In Canada, most CC agreements with merchants do not allow the merchant to pass
the fee on to the consumer. You can't charge $102.04 for a $100 product if the
customer is paying with Visa. Thus the total cost to consumers is completely
hidden.

~~~
mseebach
> Thus the total cost to consumers is completely hidden.

Just like the cost of paying by any other mean is. Cash or cheque payments are
not free.

~~~
peeters
They're not free, but they're a flat rate.

~~~
mseebach
The marginal rate within a certain tolerance is reasonably flat, of course,
but in a slightly broader perspective, it's not. It's obviously not a clear-
cut linear rate (like with CCs), but handling more cash is certainly more
expensive. Insurance, mistakes and "wastage" all increase as the sums of money
handled goes up. Also, more money takes more (expensive, background-checked)
people to count, and it means bigger safes and more frequent pickups.

------
chrismaeda
The backstory here is probably that Walmart was able to negotiate fee
discounts with MasterCard and American Express, but Visa refused to budge. So
now Walmart is punishing them for our benefit.

------
dsfyu404ed
Walmart is basically saying:

"By screwing us on the kinds of transactions we make the most of you're
hurting our profit margin and giving us less wiggle room to undercut the
competition by offering lower price. Therefore screw you, we're not taking
your cards. Oh and BTW we hold the moral high ground because we serve the
poor"

-IIRC the vast majority of prepaid bank cards use the Visa network.

-The vast majority of bank cards are issued by employers who don't want to deal with the costs associated with paper checks (not a bad thing by itself).

-The vast majority of prepaid bank cards are issued to people without bank accounts (i.e. poor people) and have shit terms (which is a different issue).

-Poor people typically buy lower priced, lower margin goods and make transactions for smaller amounts.

-Walmart moves a ton of lower priced merchandise relative to the amount of higher priced merchandise they move.

-Even at a fixed profit margin per dollar, the more small transactions are made the lower the profit margin (because 100 people buying 1 $1 item takes more cashier time than 1 person buying 100 $1 items).

-IIRC payment networks usually have a fixed minimum cost of a few cents or have cost brackets based on transaction size.

Therefore Walmart's statement makes sense (or maybe their PR people are really
good at their jobs and I analyzed that exactly how they wanted me to).

------
ourmandave
A few years ago the Illinois Secretary of State wouldn't accept VISA at DMV
facilities because they weren't allowed to pass the fee to the consumer.
(Mastercard and Discover let them though.)

[https://www.wbez.org/shows/wbez-blogs/why-dont-illinois-
secr...](https://www.wbez.org/shows/wbez-blogs/why-dont-illinois-secretary-of-
state-facilities-take-visa/e8710b2b-17e9-4e56-8633-a06878b259e9)

The link mentions that Indiana had the same problem but they paid the fee
because Customer Service was more important.

------
Sami_Lehtinen
In Finland Lidl didn't earlier accept credit cards at all. Now they do.
Everyone's been wondering when they start surcharging the credit card fees.
Personally I think it's the right way to do it. I'm not aware about any store
doing it right now. Only some on-line stores charge extra for different
payment methods and 'handling fees', which naturally vary based on selected
payment method.

------
cmrx64
The last sentence made me feel like this is Walmart trying to force Visa's
hand in this. This seems quite surprising to me in any case. Most (maybe all?)
Walmarts I've been to have ATMs in the front, so it's not like people won't be
able to get cash at the store. They'll probably just have to pay the $3 (or
whatever) fee.

~~~
LionessLover
The prices have to be the same for everyone. The fee is paid by the retailer.
The more people use a card with a high fee the more likely the retailer has to
raise the prices (for everyone). At least in my country that is so by law, you
cannot let customers pay fees for their payment method of choice. It's the
reason (that in my country) we see "minimum purchase" requirements posted if
you want to pay with a card, and that credit cards are only accepted at
pricier stores - or at large retailers who managed to negotiate a better deal
for the fee.

~~~
bluecalm
I wonder what's the reason for laws like that. It's only natural that the
customer pays the fee. If we had laws like that that would actually allow for
competing methods of payments as there would be pressure from customers on
their card/other method providers.

------
ArkyBeagle
The signal point in the statement is "Unfortunately, Visa and Walmart have
been unable to agree on an _acceptable fee_ for Visa transactions."

This give this the appearance of being part of a negotiation. "Part" could
also mean "drop the mic and walk away."

------
callesgg
It is interesting that they think that would work. For me personally it would
simply mean that i would not buy stuff from them, as they are unable to accept
my money. AKA they would lose 100% of the revenue compared to 1-2% or whatever
the percentage is.

------
tmpanon1234act
So they just started a campaign of attrition? They're going to lose unless
other companies get on board. I'm assuming Canada was chosen intentionally,
based on the data, to minimize losses. But this is going nowhere unless others
follow suit.

------
whack
Isn't Amex the most expensive of all the credit cards? At least that's what I
would expect, given that Amex has the best rewards, and most customer-friendly
service. I'm surprised Walmart would continue to accept Amex but not Visa.

~~~
blisterpeanuts
Amex up until recently has charged an annual fee to consumers, which probably
eliminates the bottom 10-20% of the market.

Probably, Walmart and other retailers just eat the cost of the Amex retailer
fee because it's a relatively small fraction of transactions; plus, there's a
competitive advantage to accepting a wider range of plastic.

~~~
forgetsusername
> _Amex up until recently has charged an annual fee to consumers_

That depends which card and/or program you're using. Just like every other CC
provider.

~~~
blisterpeanuts
True, but my point is that up until recently, American Express charged higher
annual fees and higher merchant fees than Visa, Discover, and Mastercard.
10-15 years ago there were many smaller retailers who would not take AmEx. Now
they have several products that are "no-fee" to the consumer, though of course
still with merchant fees.

------
Animats
This is just a negotiating posture. Read WalMart's web page. If WalMart had an
alternative, they'd shut down all at once, not one store at a time.

------
gambiting
So as a customer, if my bank only issues Visa cards, and I am not
willing/can't get a credit card of a different type, what do I do?

~~~
maegget
Shop somewhere else, or pay with cash?

~~~
curiousgal
OR starve. /s

------
neves
In Brazil, it is usual for Visa and Mastercard to charge the retailer amounts
as high as 6%. I don't know why nobody screams.

------
devonoel
Gotta love that marketing doublespeak, trying to make it sound like it's for
the customer rather than their bottom line.

~~~
scarlac
> Following an evaluation of credit card transaction fees in Canada and the
> rest of the world, we have concluded the fees applied to Visa credit card
> purchases remain unacceptably high.

> (...) requires us to keep costs as low as possible.

Sounds pretty to-the-point to me. Remember that for 'budget' stores and chains
the bottom line should translate directly to customer benefit (ie. lower
price).

An added anecdote: I've run a startup with high-priced goods/services with low
profits and card expenses are a huge PITA and will cost you a considerable
amount of money.

------
nxzero
Idea of credit cards still puzzles me.

~~~
op00to
The idea of carrying around cash for every transaction puzzles me. I pay
almost exclusively with credit. I get a push notification to my phone for
every transaction. At the end of the month, I get a nice CSV file with all my
transactions for analysis and budgeting. I get a 1-3% rebate on all my
purchases. If my card is lost or stolen, I hold no liability. With cash, the
liability is all mine. I hate using cash, and only use it when I must.

~~~
Artemis2
And compared to a debit card? You have all the advantages you listed (except
the rebate), but you're spending your own money.

~~~
dorfsmay
You cannot use debit for web transactions nor when in a different country.

~~~
alkonaut
False and false. Used visa and mc debit cards exclusively for 20 years all
over the world and online.

You must be speaking of something different such as "Visa electron" debit
cards.

~~~
dorfsmay
I'm talking about Interac cards, which is what we usually mean when talking
about debit cards in Canada:

[http://interac.ca](http://interac.ca)

~~~
Sgt_Apone
Most banks have Visa or MC debit cards available now. You can use them online
for most things, but at a PoS it defaults back to the Interac network.

------
IvanK_net
Denner in Switzerland does not accept Visa, MasterCard or any other card
(except of some special version of Maestro) for the same reasons.

It shocked me a little during my first shopping, that I could pay only in cash
in Switzerland.

