Walmart Visa refusal could cost banks big bucks

Walmart Visa refusal could cost banks big bucks

Walmart Visa refusal could cost banks big bucks Walmart’s recent decision to stop accepting Visa at Canadian stores is bad news for the banks that share the fees levies on credit card transactions, according to a Financial Post report.

Many speculate that the retail giant’s decision is just a bargaining maneuver to secure a better fee arrangement from Visa. But should the plan stick, there could be as much as $82 million in interchange fees at stake for the Canadian banks that issue the cards.

Interchange fees – which are paid by merchants on every credit card transaction – are already controversial; politicians and retail groups worry that the fees ultimately drive up costs for consumers. In late 2014, credit card companies voluntarily reduced interchange fees to an average of 1.5% to keep the government from stepping in with regulations. But consumer groups point out that interchange fees in Canada are still higher than those charged in other countries.

Still, Walmart’s weekend announcement that it would no longer accept Visa came as a shock to industry analysts. The company said the policy would roll out beginning July 18 in Thunder Bay, Ont., according to the Financial Post.

Walmart said Visa’s fees in Canada were “unacceptably high.” Walmart Canada pays more than $100 million in fees each year to accept credit cards like Visa, MasterCard and Discover.

Related Links:
Apple Pay embraced by Canada’s Big Five
Canada’s big banks: the results are in