Walmart vs. Visa - indicator of the new era of acquiring market

In May 2016, Walmart sued Visa, which required authorization of payments with bank cards by signing a check. In response, Visa accused Walmart of bad faith and mis-tuning of payment terminals in supermarkets. The reasons and consequences of this unprecedented conflict will try to understand further.

In a lawsuit filed on May 10, Walmart stated that using the signature verification method of a payer would increase the risk of fraudulent transactions.

Walmart management disagrees with Visa’s position. Retailers and financial service companies often conflict in the context of fraud protection. The situation is aggravated by an increase in the number of cases of payment data leakage, which cost retailers billions of dollars in revenue and incurred the cost of upgrading equipment and infrastructure.

Walmart spokesman said:
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“Entering a PIN code is currently the only reliable way to make sure that the card is paid by its real owner, and not a fraudster or a thief.”

In a counter-claim, Visa points out that Walmart did not inform her that it completely excludes the possibility of using verification through a signature. According to the representative of the Ministry of Railways, attention was paid to a noticeable reduction in the number of payments in Walmart, the largest US retailer (in 2015, the company's turnover amounted to $ 300 billion). During the trial, Visa claimed that Walmart had violated the terms of their contract, according to which the seller must provide the payer with a choice of how to authorize the payment: signing the check or entering the PIN code on the terminal.

A spokesman for the international payment system Visa in an interview with Fortune magazine said:

“We believe that Walmart behaves in bad faith and violates its obligations set forth in our contract. Visa cardholders complain that they can no longer pay for purchases at Walmart supermarkets without entering a PIN code. ”

Disagreements between the companies went international: Walmart Canada stopped accepting Visa bank card payments due to too high a service charge.

In recent years, at PayOnline, we have repeatedly witnessed how large Russian retailers put pressure not only on payment service providers, but also on acquiring banks. The high turnovers of the leaders of the Russian e-commerce market are becoming so important for payment services that provide them with Internet acquiring services that they unwittingly become “hostages” of their large customers and yield to them in negotiations.

In our opinion, the American e-commerce market, formed many years ago, reached a new stage. This year we witnessed how the trading network successfully dictates its rules to such a giant as Visa. A few years ago, such an event would have seemed extraordinary. However, in general, it should be noted that the requirements of Walmart are quite reasonable - the company primarily cares about its financial security.

International payment systems and other financial institutions will have to admit that the world has changed and conditions are now dictated not by payment giants - and not even by major merchants. In the information society, conditions dictate consumer habits and modern technologies that make the life of these customers safe and convenient. As Alice from “Alice in Wonderland” said:

It is necessary to run as fast as possible, just to stay in place, but to get somewhere, you must run at least twice as fast!

Interpreting her words, one can say that even in order to retain their positions, today's financial leaders will have to "run as fast as they can," and to strengthen their position, "you have to run at least twice as fast" - both in terms of service and technology plan.

Based on WSJ . Stay tuned to the PayOnline blog, an international processing company, and stay up to date with the global fintech industry.