Wal-Mart drops MasterCard signature debit cards
Wal-Mart said Wednesday that high fees are forcing it to drop certain MasterCard debit-card transactions beginning Feb. 1.
Wal-Mart drops MasterCard signature debit cards
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 3:22 PM ET Dec. 3, 2003
CHICAGO (CBS.MW) -- Wal-Mart said Wednesday that high fees are forcing it to drop certain MasterCard debit-card transactions beginning Feb. 1.
The move affects only signature debit cards. Consumers will be able to use their debit cards by punching in their personal identification numbers, according to Melissa Berryhill, Wal-Mart spokeswoman.
Shares of Wal-Mart (WMT: news, chart, profile) bounced around most of the trading session, last resting at $52.95, off 7 cents.
The decision, which affects under 1 percent of the company's total sales, is based on the fees MasterCard charges retailers to use the cards. Last year, Wal-Mart rang up total sales of $244.5 billion. Berryhill would not disclose how much those fees cost.
Most consumers are not aware that credit-card companies charge retailers higher fees if debit-card users sign the receipt rather than when they enter their PINs. Many retailers recover those fees from their customers.
"The fees charged by MasterCard for its signature debit are simply too high, which led us to eliminate this payment option rather than pass these costs on to our customers," Mike Cook, Wal-Mart's assistant treasurer, said in a statement. Because the cards are tied to a bank account, customers will be able to write a check for payment.
Berryhill said discussions are continuing with Visa on similar matters. "We'll certainly consider any proposal MasterCard might make," she said.
The actions are the first salvos retailers are taking after Wal-Mart and a number of other merchants took the nation's two largest credit-card issuers to court about these very issues. The MasterCard case was settled earlier this year while the Visa case is awaiting a judge's approval, Berryhill said.
In a statement, Visa Vice President Daniel Tarman said he expects Wal-Mart to continue to accepts the Visa check card.
"However, there will not be a definitive or conclusive arrangement for continued acceptance until Judge John Gleason issues an order granting final approval of the settlement of the retailers' litigation," he added.
"Visa believes that the vast majority of merchants will continue to accept the Visa check card because of the significant value that it provides to them," he said.
Posted by Craig at December 3, 2003 09:16 PM