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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.'"
Wal-Mart competes primarily on the illusion of price through loss leaders on a minority of items.
There is a huge amount of publicly available research that proves that what you claim is not true. On a randomly chosen basket of goods, Walmart most of the time is the lowest price option. Not always but often enough that statistically speaking they have an advantage. They built their entire business model on low prices and the systems required to support them. Their lead is not huge but it definitely is there. The primary reason companies like Kmart have had so much trouble is that they are competing on price with Walmart when Walmart's prices are lower and pretty much everyone knows it.
The company's actual strengths are logistics and marketing.
Logistics yes, marketing no. Logistics is only an advantage in retail if you can lower costs and thus prices as a result. And marketing? Nobody is dazzled by Walmart's marketing. People go there because they sell stuff for cheap prices. It's certainly not for the shopping experience. Walmart demonstrably competes on price and always has. They also have the advantage of having a lot of their stores in small towns where there really isn't room for a competitor to come in and displace them. Their scale allows them to negotiate prices in a pretty brutal fashion with suppliers. I have close friends whose job it is to sell to Walmart and it isn't a fun experience. They take some pretty significant measures to keep costs low because their ability to keep their advantage is entirely rooted in price.
yeah, meanwhile all the heroic family owned businesses in NYC are fighting a new proposed law to give employees at any business with more than 5 employees 5 paid sick days per year separate from vacation days
and i hear they all offer at least some health, pension benefits and the ability to be promoted into management of the family business
Walmart is no longer a family owned business. It is one of the worlds largest publicly traded companies. It's been a long time since Sam Walton and his values ran Walmart. As for benefits, they have been charged, repeatedly, about how they intentionally hold rank and file employees below the hours needed to qualify for benefits. So, if they have those great benefits that you list, it's not for the majority of the employees of the largest employer in the US.
I'd add that they also maintain this illusion by sometimes (often?) selling similar-but-inferior products. For instance, a vacuum that is identical to a top-rated cordless vacuum, but with a smaller motor and battery. If you run through there with a bar code scanner on your phone you can see just how many of the products are actually different than the ones available through Amazon and friends.
They are notorious for advertising they will meet any advertised price for the same product. The problem is that many of their products, while similar, are only a model that Walmart sells, at least in electronics.