Walmart sues Visa.

[ZenOps]

http://www.reuters.com/article/2014/...A2Q2BJ20140327

[MGCM]

yup sounds about right, big corporation, lies, coverups, massive theft...........cover your ass or get taken for a ride

[ExtraSlow]

The instant that Walmart opted out of the class action settlement, this was a foregone conclusion.

Credit card companies make billions off these swipe fees, and that business model isn't going to hold up for much longer. Some alternative that costs less than a penny a swipe will pop up, possibly championed by these large retailers.

[dexlargo]

What's with the OP that's just a bare link? What is Walmart suing VISA for? Why do you think it's interesting? If you put that in the OP, it would help me to decide if I might be interested in following the link.

Without that, I'm left to make assumptions based on the context and who the poster is - so I assume Walmart is suing Visa because they're hoarding nickel and, um... Rob Anders. amiright?

ETA: Okay, I read the article - Walmart is suing VISA in the US for 5 billion $ because VISA established excessive fees that it imposed on retailers for each VISA transaction. Walmart opted out of a class action settlement that would have seen VISA (and Mastercard) be allowed to carry on this practice going forward in exchange for 5.7 billion dollars paid out amongst all the retailers. Amazon and Target also opted out - so expect suits from them too.

I DO find this interesting, and I think it's missing the point. The consumers should file the class action lawsuit, because they're the ones who ultimately got ripped off - Walmart said they raised their prices (amongst other measures) to compensate. So the consumers already covered some of their lost profits. Any money that Walmart manages to collect will probably just make the Walton family a few billion richer.

[roopi]

Originally posted by ExtraSlow

Some alternative that costs less than a penny a swipe will pop up, possibly championed by these large retailers.

There are no real competitors to Visa/MC. There is AMEX which is even worse. They charge a higher rate to the retailers.

I'd love to see someone come up with an alternative method that was cheaper but I can't see it happening ever.

[roopi]

Originally posted by dexlargo
The consumers should file the class action lawsuit, because they're the ones who ultimately got ripped off - Walmart said they raised their prices (amongst other measures) to compensate. So the consumers already covered some of their lost profits. Any money that Walmart manages to collect will probably just make the Walton family a few billion richer.

I can't agree with the original lawsuit or your suggestion. If people want to use credit then they have to pay the price. It's not a free service.

If anything retailers should start offering cash discounts. It's common practice in the wholesale industry so why not use it with mass retailers?

[rage2]

Originally posted by ExtraSlow
Credit card companies make billions off these swipe fees, and that business model isn't going to hold up for much longer. Some alternative that costs less than a penny a swipe will pop up, possibly championed by these large retailers.

While Visa does make billions, it also costs billions to run the services. Visa's gross margin was 20% in 2012, and 40% in 2013. At the end of the day, this has nothing to do with consumers, Walmart just wants a bigger piece of the pie. Companies the size of Walmart would have preferential treatment on swipe fees at under 1%. Going by 2013 numbers, Visa's model would be unprofitable if they reduced Walmart's fees from 1% to 0.5%. That's a 50 cent savings on a $100 charge, or 5 cents on a $10 item.

Originally posted by roopi
If anything retailers should start offering cash discounts. It's common practice in the wholesale industry so why not use it with mass retailers?

I don't think this is allowed in the merchant agreement. At least, you're not allowed to advertise it.

[dexlargo]

Originally posted by roopi
I can't agree with the original lawsuit or your suggestion. If people want to use credit then they have to pay the price. It's not a free service.

It wasn't a serious suggestion. I'm just saying that neither side in this battle is actually on the consumer's side. Ultimately a successful suit may be better for the consumer though, because retailers might be enabled to trim their costs, and could pass those savings on - if they so choose.

If anything retailers should start offering cash discounts. It's common practice in the wholesale industry so why not use it with mass retailers?

Originally posted by rage2
I don't think this is allowed in the merchant agreement. At least, you're not allowed to advertise it.

You're not allowed to do it at all under the merchant agreement. Some retailers do it anyway.

I remember Memory Express used to offer a discount for cash, but I think Visa/MC went after them and forced them to honour the merchant agreement.

This is the problem with Visa/MC - there's not enough competition. If retailers want to allow people to use a credit card to buy stuff - and why would they want to cut down the number of people who will buy their product? - they have to accept the credit card companies' terms.

Interac may be cutting into the amount that goes through credit card companies though. Since Interac basically replaced the inconvenient cheque format with an option that was just as convenient as a credit card for making payments... Which gives me an idea.

Here's an idea (and maybe this already exists): If banks set up alternatives to credit cards using Interac, like another account option that you could press on the pin pad - e.g. chequing, savings, AND credit line - Visa might be forced to lower their swipe fee to be more in line with Interac's 25 cent swipe fee (or whatever it is) to prevent retailers abandoning them. I'm not sure if there's a profit motive for banks to do that, though.

[Xtrema]

Everyone talks about lack of competition and high fees yet nobody seems like use Discover.

[InRich]

Alot of my customer ask me if I accept Visa... and I'll always say no, cause of the outrageous rate charges. Its why opt not to offer this service to any of my customers.

I would love to pay around 1%, and I hope they get competition in the future.

[rage2]

It's all economies of scale. There are no competition because anyone firing up a CC company would lose money charging even Visa/MC's discounted rates until they rake in a couple hundred billion dollars worth of swipes. Or fuck over the consumers so it's impossible to win a dispute, and force customers to pay for fraudulent charges (these, along with bonuses account for a large portion of Visa's expenses based on their annual filings).

[roopi]

Originally posted by dexlargo
Here's an idea (and maybe this already exists): If banks set up alternatives to credit cards using Interac, like another account option that you could press on the pin pad - e.g. chequing, savings, AND credit line - Visa might be forced to lower their swipe fee to be more in line with Interac's 25 cent swipe fee (or whatever it is) to prevent retailers abandoning them. I'm not sure if there's a profit motive for banks to do that, though.

If this was to work Interac would do the same thing Visa is doing and up the rates. Retailers already have issues with Interac rates. There are so many places that have either minimum charges for Interac or they charge you an additional processing fee for using Interac.

Originally posted by InRich
Alot of my customer ask me if I accept Visa... and I'll always say no, cause of the outrageous rate charges. Its why opt not to offer this service to any of my customers.

I would love to pay around 1%, and I hope they get competition in the future.

As you grow volume you can reduce your rates for sure but 1% would never happen. Some industries are forced to use it and some can get away without offering it. If a retailer only accepted cash they would definitely lose business.

[rage2]

Originally posted by dexlargo
Here's an idea (and maybe this already exists): If banks set up alternatives to credit cards using Interac, like another account option that you could press on the pin pad - e.g. chequing, savings, AND credit line - Visa might be forced to lower their swipe fee to be more in line with Interac's 25 cent swipe fee (or whatever it is) to prevent retailers abandoning them. I'm not sure if there's a profit motive for banks to do that, though.

Visa is already doing that in the US. There is no "debit" card in the US, it's run under the Visa/MC network. No clue if the fees are same or not though.

Originally posted by InRich
I would love to pay around 1%, and I hope they get competition in the future.

You'll never get 1% rates, as cardmember rewards alone costs Visa/MC ~2%. The only reason why Walmart can be offered with such rates is because they bank on their clientele to sit on balances and make money on interest. Visa has all that data to do a proper ROI analysis based on the cards used at Walmart, and the kind of financial status of it's clientele to make a 1% rate profitable.

When I last dealt with our processor, we negotiated a fairly low rate, but we get %'s stacked on top of that based on different types of swipes (risk assessment surcharges), and reward cards, etc. The more rewards the card being used has, the more it costs us.

[roopi]

Originally posted by rage2

When I last dealt with our processor, we negotiated a fairly low rate, but we get %'s stacked on top of that based on different types of swipes (risk assessment surcharges), and reward cards, etc. The more rewards the card being used has, the more it costs us.

Below 1.5-2% is possible but like you said some of those reward cards do carry the extra charges.