The threat from Walmart being reported Saturday to stop accepting Visa cards may be a bluff, but that will depend on whether it spooks Visa into giving Walmart a break on fees. Retailers everywhere know too well the cost of accepting credit cards. Dollarama, the wildly successful Canadian low-end chain, accepts only cash or debit and appears happy with that arrangement. There was a pilot project to see if credit cards cannibalized its cash and debit revenues but nothing seems to have come of it. In 2004 in the U.S. the huge drugstore chain Walgreen (not connected with Walmart) stopped accepting American Express cards because the fees were too high. It may also have had to do with the Amex practice of holding the receipts for a while. Later, after some sort of deal, Walgreens accepted Amex again.
WHO GETS HURT?
The question is, who gets hurt. The conventional guess is that Walmart sees a lot of Visa business, It’s customers may be close to maxed most of the time. In the Walgreens-Amex tiff, it was agreed that Amex was the loser because well-heeled drugstore customers had cash or other means of paying for prescriptions and sundries. At Dollarama, there is no doubt that Visa and MasterCard are the losers. CBC
Don’t have the cash, don’t buy it. That’s been my motto for the last 20 years because credit card interest rate are atrocious.