Walmart Canada to drop Visa credit support this summer

June 12th, 2016  |  News

It’s almost unthinkable to imagine walking into a Walmart, the world’s largest retail chain, and not be able to use some of the most common credit cards in the world. Unfortunately that’s exactly what will happen starting next month.

CBC reports that the company will gradually phase out support for cards on the Visa credit network starting July 18 with the first locations to change being in Thunder Bay, ON.

Visa, like any other credit card network charges processing fees to retailers on every transaction. Visa’s fees are between 1.42% to 2.08%. Main competitor MasterCard offers 1.44% to 2%. While small retailers are given rates within this range, MasterCard offers an even lower rate of 1.26% to retailers who have purchase volumes of excess of $3 billion. To a company like Walmart, which makes hundreds of billions of dollars worldwide every year, that lower rate translates into millions of dollars saved every year. In the company’s eyes, Visa’s fees are simply too high for them to accept.

In this situation however, it’s hard to tell if Walmart will be hurt more by losing the payment option than continuing to pay the high fees. Not being able to shop with Visa could be a major shopping decision for many in Canada and the stores could lose business to other major retailers. Of course, a company with that much experience has likely weighed the options and calculated that cutting the service will do more good than harm to their profit margins.

Walmart won’t give up trying to reach an agreement with Visa to get a better deal and have them return to their stores.