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Wal-Mart Sues Visa For $5 Billion For Rigging Card Swipe Fees
Hugh Pickens DOT Com writes: "Reuters reports that Wal-Mart has sued Visa for $5 billion, accusing the credit and debit card network of excessively high card swipe fees. Wal-mart is seeking damages from price fixing and other antitrust violations that it claims took place between January 1, 2004 and November 27, 2012. In its lawsuit, Wal-Mart contends that Visa, in concert with banks, sought to prevent retailers from protecting themselves against those swipe fees, eventually hurting sales. 'The anticompetitive conduct of Visa and the banks forced Wal-Mart to raise retail prices paid by its customers and/or reduce retail services provided to its customers as a means of offsetting some of the artificially inflated interchange fees,' says Wal-Mart in court documents. 'As a result, Wal-Mart's retail sales were below what they would have been otherwise.' Interchange fees, the industry term for card-swipe fees, have been a major point of contention between retailers and banks. The fees are set by Visa and other card networks and collected by card-issuing banks like J.P. Morgan Chase & Co. Retailers have argued that the fees had been set too high due to a lack of competition with the two payment industry giants.
Wal-Mart also took a shot against Visa over payment card security. Data breaches last year at Target Corp., Neiman Marcus and others have drawn attention to the country's slow adoption of card technology that uses computer chips and PIN numbers and is seen as less susceptible to fraud than the current system of magnetic stripes. 'Wal-Mart was further harmed by anti-innovation conduct on the part of Visa and the banks,' says the lawsuit, 'such as perpetuating the use of fraud-prone magnetic stripe system in the U.S. and the continued use of signature authentication despite knowledge that PIN authentication is more secure, a fact Visa has acknowledged repeatedly.'"
Wal-Mart also took a shot against Visa over payment card security. Data breaches last year at Target Corp., Neiman Marcus and others have drawn attention to the country's slow adoption of card technology that uses computer chips and PIN numbers and is seen as less susceptible to fraud than the current system of magnetic stripes. 'Wal-Mart was further harmed by anti-innovation conduct on the part of Visa and the banks,' says the lawsuit, 'such as perpetuating the use of fraud-prone magnetic stripe system in the U.S. and the continued use of signature authentication despite knowledge that PIN authentication is more secure, a fact Visa has acknowledged repeatedly.'"
Because if Walmart wins, they will surely use the money to raise your meager wages instead of buying the CEO a new yacht.
Ezekiel 23:20
When one huge evil corporation attacks on another huge evil corporation for being evil, does it cause a rip in space time?
SJW's don't eliminate discrimination. They just expropriate it for themselves.
That would fix it.
It all starts at 0
This is, and has long been, a huge ripoff. I'm rather sure that Walmart doesn't pay the full 3% that Visa/MasterCard like to charge for transactions, but when you look at the overhead of transactions in the cryptocurrency markets, you can see how ridiculously overpriced the credit card transactions are. The costs here are near 0, and so should the charges be, but the system is carefully crafted to avoid competition, and that's illegal.
set softtabstop=4 shiftwidth=4 expandtab nocp worlddomination
Because if Walmart wins, they will surely use the money to raise your meager wages instead of buying the CEO a new yacht.
Raise wages? Probably not. Lower prices? Very possibly. Walmart competes primarily on price so anything they can do to lower costs tends to get at least partially passed on to customers in order to keep their competitive advantage. A lot of companies would pocket the savings but in this particular instance it might actually end up benefiting customers.
Plus Walmart beating up Visa on price is almost certainly going to benefit consumers in the long run and Walmart is big enough to actually succeed. The cost of credit card swipe fees gets rolled into the prices we pay for products so if they get lowered at least some of that money will flow through to us as end customers. Not all of course but definitely some.
Walmart.
One word.
No hyphen.
Walmart.
Has PIN/chip on every credit card now. I brought my US Visa card here and when I hand it over for use some clerks go "huh?"
Is there any way they can both lose?
Whilst I know chip and pin is not fool proof, I was shocked to hear the US is still swiping cards for payments!
"despite knowledge that PIN authentication is more secure"
Visa's probably thinking about all the people who can't seem to remember their PINs and afraid of losing sales from those people.
Coder's Stone: The programming language quick ref for iPad
I was thinking the same thing, install an experimental "bitcoin checkout line". It would probably be too confusing for 99%+ of their customers though.
Walmart made $13bln US in profits last year ... half of which accrues to the Walton "family."
'The anticompetitive conduct of Visa and the banks forced Wal-Mart to raise retail prices paid by its customers ...
Anti-competitive? Hypocrites.
Walmart looking after customers*? Mind blown.
(*shareholders)
Maybe Walmart is just being stupid. Did they ever consider that? My swipe fees are zero. I pay $21 flat per month to the processor and then exactly what the card costs so if visa wants 0.8% on a debit card, that's what I pay. Maybe they should have gotten a plan that doesn't suck.
Even after the rebranding, the company's legal name is still "Wal-Mart Stores Inc.". So Wal-Mart the company operates Walmart the store chain.
I'm rather sure that Walmart doesn't pay the full 3% that Visa/MasterCard like to charge for transactions
No, they don't in a lot of cases but the amount they do pay is VERY substantial. We're literally talking about billions of dollars here no matter what exact amount Walmart pays.
but when you look at the overhead of transactions in the cryptocurrency markets, you can see how ridiculously overpriced the credit card transactions are. The costs here are near 0, and so should the charges be
The cost of credit card transactions are nowhere near zero. Transaction processing in any form is not cheap, even at high volumes. There are significant costs for both on the front end (credit card machines + computers + accounting + banking fees), and on the back end (computers, customer service, accounting, security (yeah, ironic I know), billing, payment transaction costs, marketing, and more). While I agree completely that credit card companies overcharge, the assertion that their costs are anywhere close to zero is not supported by the facts. Building a payment infrastructure like the one Visa has costs many billions of dollars to build and more billions to operate on an ongoing basis.
Furthermore if you are going to make the absurd comparison between bitcoin and credit cards, you need to account for ALL the costs including currency exchange fees, exchange rate risk, opportunity cost, infrastructure cost (which bitcoin lacks), customer service (which bitcoin lacks), counterparty risk (no one is going to give you a refund), accounting, and the rest of them. Once you account for what bitcoin really costs and what it lacks, the cost of it is actually higher in most cases on a risk adjusted basis. (and if you aren't accounting for risk then you are being really really foolish)
If you want Walmart's profits to go to you, buy WMT.
I feel so weird saying this... But, Go Walmart? I guess.
Anyway, as another poster pointed out it's about time someone went after them. Maybe taking 5 billion from them will be a real wake up call.
Creationist Textbook Stickers Declared Unconstitutional by CowboyNeal
who really pays for all that usury plus the WMD on credit cabals' genocide projects? plus all the stipends for all the crown royal self adulating opulence plus... some still calling this 'weather'?
Bitcoin payments in the store would require Wi-Fi in the store, which is something with which our local Walmart has experimented but which it ended up terminating. Or it would require pairing the user's tablet to the register's Bluetooth transceiver each time, which might work for a dedicated kiosk to exchange BTC for gift cards but could hold up the queue of guests if used for actual groceries.
Since the middle class has been decimated, this is how business of the future will run... now that they've fleeced the rest of us, big companies will sue other big companies and that's their ticket to profitability and stock price rises.
If telephones are outlawed, then only outlaws will have telephones.
The settlement, assuming this article is accurate, includes a broad ligation release that will basically shield the credit card companies from getting sued in the future. So essentially they are giving a token amount to this settlement and getting a huge litigation release that will allow them to continue to screw people essentially forever. I'd opt out of this class if it was me. Walmart, Target and Amazon have all opted out. Hopefully they will all sue individually and force a reasonable outcome this time. Depending upon how this goes Walmart may be doing us all a favor here by trying to force a better settlement.
This is just another example that reinforces my view that class action lawsuits are basically a scam. I have been involved in two where I actually joined the class and in both cases the company being sued and the lawyers came out just fine and the people in the class got pretty much nothing. I had two other instances where I qualified and I just opted out. Not surprisingly those cases also involved making lawyers rich while the people in the class got nothing. In this case the class members are getting next to nothing and giving up a hell of a lot to get it. Can't say I am surprised.
"Wal-Mart employees are the largest group of .. food stamp recipients"
If they win, why would they lower prices?
Because that is their business model. If the win they lower prices which diverts more business from Target and KMart and the rest. A lot of shoppers buy primarily on price and go where they are likely to get the best deal. For all the bitching people engage in over Walmart, when push comes to shove they tend to vote for low prices and overlook everything else.
which is the biggest benefactor of food stamps in country?"
http://rinf.com/alt-news/latest-news/walmart-admits-profits-depend-poverty/
Expect your travel insurance, extended warranty protection, points, cash back, and other credit card features to dry up rapidly if interchange fees are reduced. These perks that have been built up over the years are not free, they are paid for by interchange fees.
To walmart, "anti-competitive" behaviour means "you are not trying to put your competitors out of business, how dare you, you're obviously a commie!"
Now, they likely do have some valid complaints here.
But bitching about a slow transition away from magnetic stripe cards when *you are one of the last retailers to install NFC payment terminals* and more importantly *knowingly skipped the start of migration during your last payment terminal upgrade cycle* is bullshit.
Now, I can understand if maybe Walmart were just at the wrong point in the upgrade cycle and hadn't upgraded their terminals in years, but I know for a fact that nearly every Walmart I've been to in the last year has upgraded their terminals in that time period and, despite many of their competitors having NFC payment terminals for a few years, Walmart did *not* upgrade to terminals that were capable of anything but magswipe.
Target appears to have deployed terminals that look NFC-ish but aren't, and did so before the NFC rollout started and hasn't done another deployment since then, so they do have an excuse.
retrorocket.o not found, launch anyway?
I'm not particularly fond of Wal-Mart. However, as a merchant who suffers the whims of credit-card company policies, I'm really glad to see someone beating up on VISA. As another poster said, Wal-Mart might just be big enough to succeed.
I would love to see a group of large merchants get together and pick one credit card company (let's say MasterCard) and simply refuse to accept it unless security is improved. Yes, customers would complain, but if the merchants spun it correctly as trying to improve customer security and reduce identity theft, I think MasterCard would cave. Then move on to VISA.
I wonder if the lawsuit is really driven by the second part of the summary.
I can picture the Wal-Mart lawyers saying, "Hey Visa, if you helped underwrite and expedite the Chip & PIN card hardware and software transition, this big nasty lawsuit would go away." They may have already said the same to MasterCard in a less public way. Or maybe they asked both Visa and MasterCard to help on the transition, and MasterCard said yes.
- speaking only for myself, as always
It's usually the first sign of the corporate death spiral: suing other people for your lost business. I can't be the only person who thinks it would be a boon to the economy if Walmart withered and died (as long is it's slowly over a decade or so). Good riddance.
Slashdot can detect where links go to. How about not displaying posts that contain "goat.cx"?
Little travel tip that I, as a Canadian, learned years ago entirely by chance.
If you encounter this security system in the US (still mostly as gas pumps) - 99.5% of pumps will allow Canadians to use a "zip code". Take the first 3 numeric digits in your Postal Code, and add "00" to the end, making a 5 digit "zip code". Works like a charm almost every time. I've only had it fail once. And they do actually use this as a security code, I've tried 55555 and 90210 and nothing else will work. But this one does.
I'm stunned that this little tidbit isn't all over the Canadian news, considering how many of us travel to the US (especially in our cars!).
Endless arguments over trivial contradictions in books written by ignorant savages to explain thunder in the dark.
I enabled 2FA* for my accounts on multiple crypto-currencies exchanges. I enabled 2FA for my Blizzard account. I also have 2FA for my PayPal account.
But my bank doesn't even support 2FA and neither does VISA.
Funny how the big guys who handle real currencies (aside from PayPal), have less securities in place than the others.
* two-factor authentication
Get free satoshi (Bitcoin) and Dogecoins
I gave up on ever buying anything that works at walmart.
They dont sell products, they sell stage props that look like products.
Thats fine, we were going to lose anyway.
they were empty promises anyway.
Except card fees effect us all whether or not we use them. Retailers are required by some quirky law (probably created by the card companies) to not assess any fee for card use, despite the fact that it costs them for every transaction. In the real world retailers would charge customers a small fee for using a card because they are charged a small fee for customers using a card. Instead retailers have to up the prices on everyone to make up for the shortfall, probably costing everyone who purchases from a retailer (whether they use cash or card) +$1 per transaction. Doesn't sound like much but over a year that is probably several hundred dollars per person.
I'm not a huge Walmart fan, but I'm a bit surprised they don't just bring their own card to the market, then. They wouldn't even have to be terribly competitive, just anally rape you just a little less than the other credit card companies. The money they'd save on transaction fees in their own stores alone would probably more than cover the cost of the venture.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
I still can't figure out what Walmart is suing over. How are they being overcharged?
I swear to God...I swear to God! That is NOT how you treat your human!
Hrm. I'm glad someone is finally stepping up to confront the assholishness of the credit card processors and their crazy fees. But I just voted for Walmart in the Worst Company in America tourney at http://consumerist.com/tag/wci.... I'm starting to think I should have picked Abercrombie & Finch instead.
Scott
"Hokey religions and ancient weapons are no match for a good blaster at your side, kid."
I wouldn't expect a 34-hour a week retail job to be able to support a family of four. So I don't have any problem with a person working 34 hours a week at Walmart to be unable to support a family of four.
A 10-20 minute wait for confirmation is too long for checkout but just fine for a gift card vending machine. The guest comes in and spends BTC at the kiosk and is issued a gift card with no value on it. Then the guest pockets the gift card and goes shopping. Once the kiosk determines that the transaction has stuck, it credits the gift card with the corresponding USD value. By the time the guest picks out groceries and gets to the checkout, the gift card has become ready for use.
So thats how they're trying to push it here in the US. I believe when chip n' pin was introduced in the UK it was used as an impetus to shaft card holders with fraudulent purchases. But it seems here in the US they're talking a slightly different route, shafting the retailers who will then pass those costs on to the customers. Same basic thing I suppose but they're probably hoping that since people won't actually see it in an itemized fashion coming out of their paychecks they won't notice, hopefully the retailers will revolt against it as much as the European people did.
And you honestly expect usurious credit card companies to be nicer to you than Wallmart?
You've already bought their bridge, or is it their cock down your throat?
Walmart has a point. CC transactions costs for a store are ridiculous. If you have a 'rewards' based card, the store gets charged a slightly higher rate then using a card without rewards attached to it. Debit based transactions are usually lower then credit transactions because they charge a flat rate for the transaction instead of a percentage of the sale. In Europe the transaction rates are ridiculously low compared to the US. Here a MC/Visa transaction is anywhere from 1 to 2 percent of the sale. In France it is anywhere from 0.22 - 0.45%. Smaller merchants, those that do not have the volume to negotiate usually pay a much higher percentage then a place like Walmart. Visa uses fraud as the main reason on why the rates are so much higher. Going to EMV cards would solve a lot of the fraud issues, but the issuers are fighting it tooth and nail because the cost to make a EMV card is 38 cents versus 14 cents. An entire industry has been formed because of fraud and it costs software developers a ton of money just to be 'certified' so they can follow the standards that Visa has laid out. Going EMV would all but eliminate the need for PCI and probably make the entire industry obsolete, which is another reason why they are fighting it so much. I really hope that Walmart wins this case and others follow suit. Maybe it will force Visa to finally adopt standards that will lower the cost of doing business as well as protect us from fraud in the future.
It depends where you are. Wherever they can get away with it, credit card companies prohibit discounts for other forms of payment as a condition of allowing you to accept credit cards. In some places this has been made illegal, but certainly not everywhere. Even where it would be legal to offer a cash discount, my experience is that the CC-companies will give the impression that you really do not want to do that...
Maybe Walmart is just being stupid. Did they ever consider that?
Walmart is many things but stupid is not among them.
My swipe fees are zero.
No they are not. They might be rolled in with some other charge but you aren't getting it for free. If you pay a flat fee per month then you do a good approximation of zero transaction volume.
Maybe they should have gotten a plan that doesn't suck.
Walmart has more negotiating power than pretty much any retail firm on earth and they squeeze every dime of cost out that they can. If a better deal could have been negotiated it would have been.
I would love to see a group of large merchants get together and pick one credit card company (let's say MasterCard) and simply refuse to accept it unless security is improved.
If they did that then Mastercard would have them in a courtroom faster than you can say "anti trust regulation". The term for that is collusion and it's clearly illegal.
So which of these is Godzilla, and which is Gamera?
http://alternatives.rzero.com/
For a store's card to be desirable over a bank's, there would usually need to be some incentive, like discounts or loyalty programs.
If we ever get to a point where enough stores favor BTC, then you will start seeing banks dealing with BTC. One would deposit BTCs to their bank, who issues them a debit card, which then can be used at many different stores.
And then we'll be right where we started.
Someone who skims your stripe isn't going to know your zip code, at least not at a restaurant or faceplated ATM where most of that happens.
It would probably be more secure to require the card holder to indicate if they are male or female, since that would only be guessable 50% of the time, unlike the zip code which could probably be guessed 90% of the time if one simply guesses the zip code that the restaurant or ATM is located in.
That is precisely what Wal-mart needs to sue them over. Require everyone using VISA to directly pass on the fee as an upcharge to the customer, and then see how much noise consumers make.
Hate to break it to you, but Best Buy, Target, K-Mart, Frys, and virtually every other major retailer does exactly the same thing -- and the manufacturers cooperate fully in helping them do so. Not only does Sony, Dell, Toshiba, etc. intentionally make a dozen different variants of the same basic model, differing only in minor cosmetic details or in the "free" accessories bundled with the product, but they will *tell* each of the "big box" retailers which bundles have already been chosen by their competitors.
Frankly, it's amazing that this isn't illegal, as a form of collusion and price-fixing. It certainly violates the *spirit* of such regulations, if not the actual letter of the law...
Let's hope Visa then sues Walmart for not paying a living wage or health benefits, forcing Visa, and everyone else, to subsidize the hundreds of thousands of Walmart employees with government services via higher taxes.
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This is just Wal-Mart being greedy. Transaction fees are from the merchant that handles the point-of-sale credit card transactions and is how they get their money, it is not up to VISA to "protect Wal-Mart against those swipe fees". If Wal-Mart wants to avoid credit card fees then they can go cash only, or choose a different credit card point-of-sale merchant. Besides 2004 is well beyond statute-of-limitations.
Wal-Mart just thinks that they shouldn't have to pay the same rates that everyone else pays. My company does business with Wal-Mart and you would not believe the shear arrogance of even low level department managers of individual stores.
Data breaches last year at Target Corp., Neiman Marcus and others have drawn attention to the country's slow adoption of card technology that uses computer chips and PIN numbers and is seen as less susceptible to fraud than the current system of magnetic stripes.
Can anyone explain to a relative non-tech person just how an RFID chip (which is designed to leak information over moderate distances) is "more secure" than a mag stripe which has to be run through a reader.
they know if they remove that form of payment, they will lose quite a few of their customers.
I pay for everything with a credit card that I pay off monthly. I have little recourse if the product I buy is defective or not-as-advertised if I pay in cash or check. ( btdt ) All too easy to call the CC company up and deal with it if necessary. Is another reason why I don't allow direct bank drafts from my primary checking account. I pay monthly bills by CC and can easily dispute it if / when they misplace that decimal point instead of it wiping out my bank balance. ( I use secondary / tertiary bank accounts without overdraft protection for bill pay if absolutely necessary )
CC fees are the prices retailers pay for the CONVENIENCE their customers enjoy. Want to remove that convenience ? Just be prepared to handle the fallout of fewer customers. Guess they have to weigh which one will cost them more.
Sounds to me like companies are reaching the critical point of how much cost cutting they can actually do to show ever increasing profits to shareholders. At some point in time, your profits will level off and there is nothing you can do about it.
what you want is a social safety net so that you can do stuff like that without the constant fear of bankruptcy. Canada has one, and it's why you see a lot of good sci-fi writers coming out of there.
.01%. The billionaires and what not. I say have gov't make a nice big safety net so you don't have to. But then, if we did that you could seriously compete with the likes of Walmart, and they can't have you doing that now can they?
You don't want to be responsible for your employees well being? Fine. Then let the government do it, or just admit you're happy with 100 million people (about a third of the populace) living in abject poverty.
I suppose I really shouldn't single you out. The problem is we've all been put at each other's throats by the real 1%. Heck, the
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So you're saying it's wrong to save money? You're assuming all the management at Wal-Mart are living like kings. You do realize that the rank-and-file walmart employees are basically the cheapest type of employee ever. They shouldn't expect benefits, they shouldn't expect more than minimum wage. If you can be replaced with practically anyone off the street then your job is practically worthless and you need to learn to become qualified for another position, or leave and work for another company. You act like when someone goes to work for Wal-Mart they can never leave. This is absurd. People advance, they change jobs, they get education. If you want wal-mart to pay benefits or higher wages to entry level employees, then expect them to raise their prices. Despite what you think they cannot simply cut the salary to the CEO or some other high level executive. Those people will simply leave and go work somewhere where they can get what the job is worth. To summarize: Jobs have a market value. To price a job over a market value is to lose money. To price a job below market value is to lose employees. To raise wages that money has to come from somewhere. Wal-Mart is not a steady-state organization. It changes. It opens new stores, it researches new products to sell. All of these things cost money. In addition, it has many many other positions than the guy checking you out in the actual Wal-Mart store. Those positions cost more money, and generally speaking (though not necessarily) higher performing employees get higher wages. So in conclusion, sure wal-mart can raise wages and provide benefits above a job's value, but all that necessitates it charge more for products and/or services, or cut the money needed from somewhere else. Trust me if they cut the entire salary of the Wal-Mart CEO and distributed it amongst it's minimum-wage employees, it wouldn't amount to a hill of beans.
Bitcoin is the solution. Start understanding this. (no fees)
How long before the dollar collapses.
WalMart has some nerve trying to sue any credit card company when WalMart has allowed stolen credit cards to be used in their stores for years. This is one of WalMarts dirty little secrets that's not such a secret among WalMart employees such as cashiers who are told to allow stolen credit cards. What a dicgrace.
I guess what's good for the goose isn't good for the gander? http://wp.me/p4HrB-3Nb