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Payments

Wal-Mart to stop accepting MasterCard Signature Debit Cards

In a move that reinforces the increasing power of major merchants in the world on payments, Wal-Mart has announced that it will stop accepting MasterCard signature debit cards at its stores beginning in February 2004.

“As a result of the merchants’ lawsuit settlement, MasterCard can no longer require acceptance of its signature debit card as a condition of accepting its credit card,” said Mike Cook, Wal-Mart’s vice president and assistant treasurer. “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.”

The reality is that almost all signature debit cards issued (both MasterCard and Visa) include another network mark on the back of the card suitable for use in a PIN-entry environment. Over the last few years, some merchants have been subtlely suggesting to consumers — when they use such a card — that they enter a PIN and complete the transaction as a PIN-debit transaction at lower cost to the merchant vs. signing the transaction receipt and the merchant paying a higher fee. Wal-Mart’s move removes the subtlety completely — for MasterCard debit cards — which will only be accepted with PIN.

The Wall. St. Journal also covered this story in this morning’s edition — and included the following comment:

Mr. Cook said Wal-Mart has struck a deal to accept Visa signature debit-card transactions at a lower fee than Visa currently charges. But the new fees won’t go into effect until the New York federal judge presiding over the litigation gives final approval to the settlement.

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