All eyes on Visa’s war with Walmart

Smaller firms see pros and cons in public dispute

MONTREAL Canadian retailers are watching with both hope and unease Visa’s very public battle with Walmart.

An association representing convenience-store owners says they are pleased the world’s largest retailer has highlighted hefty credit card fees, but is worried Walmart will gain an even larger competitive advantage.

“If a big retailer like Walmart is faced with the challenge of paying these fees, you can only imagine how small businesses are facing this with very little leverage or the ability to negotiate,” said Alex Scholten, president of the Canadian Convenience Stores Association.

He said his members pay between 1.5 and four per cent for purchases made with credit cards, likely far in excess of Walmart.

“If Walmart is the only retailer able to get a good deal because of their buying power, it certainly isn’t something we’re happy about.”

Visa has accused Walmart of using consumers as leverage to strike an even better deal by threatening to ban the popular credit card from its Canadian stores.

“I was surprised that they would publicly state that they were going to put their consumers in the middle of this business dispute,” Visa Canada president Rob Livingston said Thursday.

He declined to speculate whether Walmart’s move might have been motivated by efforts to push its branded MasterCard. Walmart did not reply to a request for comment.

After months of negotiations, Walmart quietly announced last weekend that “unacceptably high fees” has prompted it to stop accepting Visa cards beginning July 18 at stores in Thunder Bay, Ont. The retailer plans to reject the cards at more than 400 Canadian locations.

Visa defended itself in an open letter published in several Canadian newspapers, saying it offered Walmart one of the lowest rates of any merchant in Canada. But the world’s largest retailer wanted

If Walmart is … able to get a good deal because of their buying power, it certainly isn’t something we’re happy about.

more.

“And they are using their size and scale to give themselves an unfair advantage,” the unsigned letter said.

Livingston said Visa presented what it considers a “very fair offer,” but doesn’t feel it is appropriate for Walmart to get a rate lower than charities, educational institutions and utilities.

The Retail Council of Canada says high credit card fees are unacceptable to retailers.

“I’m not suggesting that the floodgates are about to open on this,” said Karl Littler, vice-president of public affairs. “(But) there’s potentially going to be others who will make similar decisions in the future.”

The retail council, which represents retailers including Walmart, is calling on the federal government to intervene to mandate lower fees for all merchants.

Visa and MasterCard agreed in late 2014 to reduce so-called interchange fees by about 10 per cent, or $400 million, under the threat of action by the previous Conservative government.

Visa said it lowered fees further in April for small businesses including grocery stores, corner bakeries, butchers and ice cream stores.

Littler called the cuts modest because Canadian fees are still five times higher than in Europe and three times the levels in Australia.