Starting on Oct. 24, Wal-Mart will stop accepting Visa in all 16 of its Manitoba stores, spokesman Alex Roberton said. The giant discount retailer will start posting signs in its Manitoba stores on Thursday to notify customers of the change.Simon Dawson/Bloomberg
Wal-Mart Canada Corp. is going ahead with its threat to expand beyond three Thunder Bay stores its campaign to refuse Visa credit cards as the retailer's battle over service fees escalates.
Starting on Oct. 24, Wal-Mart will stop accepting Visa in all 16 of its Manitoba stores, spokesman Alex Roberton said. The giant discount retailer will start posting signs in its Manitoba stores on Thursday to notify customers of the change, he said.
The move follows Ottawa's announcement on Wednesday it will conduct a further review of the fees charged by credit-card networks and the effects of reduced fees by Visa Inc. and MasterCard Inc. over the past two years. The two credit-card companies said their independent audits back up their voluntary commitments to lower fees to an average of 1.5 per cent over that period.
Analysis: Not in front of the customers: Wal-Mart and Visa will both lose loyalty
While Visa Inc. and MasterCard Inc. agreed in late 2014 to reduce Canadian fees to an average of 1.5 per cent – from 1.6 to 1.7 per cent previously – Wal-Mart and other large retailers generally negotiate their own terms.
Wal-Mart has cited "unacceptably high" interchange fees, saying it pays $100-million in annual credit card expenses.
"Wal-Mart's decision to further limit Visa acceptance in Manitoba is disappointing," a Visa spokesperson said.
"We know from our experience in Thunder Bay that consumers want the option to use the payment method of their choice when shopping – including at Wal-Mart stores. Visa remains committed to actively working with Wal-Mart so that Canadians can use their Visa cards wherever they wish to shop."
Wal-Mart's battle with Visa reflects many merchants' view that the fees are excessive. Wal-Mart started this summer to phase in its ban on Visa cards at its more than 400 Canadian stores, beginning in Thunder Bay on July 18.
Mr. Roberton said there were "no surprises" in Thunder Bay: "Customers have adjusted to the change." He would not provide details on the impact of the ban on Wal-Mart's sales.
Visa had the largest share of the Canadian credit-card market by purchase volume in 2015 with 60 per cent, followed by MasterCard's 35 per cent and about 5.4 per cent for American Express, according to the Nilson Report, an industry newsletter.
"Visa remains committed to doing everything reasonable to ensure Canadians can use their Visa cards everywhere they wish to shop – including at Wal-Mart stores," the company said in a July e-mail.
Visa in June referred to a 2014 agreement with Ottawa "to lower the cost of electronic payments to a reasonable and fair level." And it said it "offered Wal-Mart one of the lowest rates of any merchant in Canada."
Smaller retailers say the voluntary fee reductions aren't enough to prevent small businesses from feeling the pressures of high rates that have a disproportionately deeper impact on them.
Wal-Mart's escalation of its Visa fight illustrates the large retailer's clout, said Gary Sands, chair of the Small Business Matters Coalition and vice-president of the Canadian Federation of Independent Grocers. "There is not a small retailer in Canada that can afford to go head to head with Visa. l mean, kudos to Wal-Mart for doing that, but we can't."
Canadian businesses pay $5-billion to $7-billion annually in interchange swipe fees, said Trish Anderson, a vice-chair of the coalition and president of the Canadian Independent Petroleum Marketers Association. And 98 per cent of businesses in Canada are defined as small and medium-size. "It is these businesses that are paying the bulk of these billions of dollars in fees annually siphoned out of the economy to the payments industry," she said.