More Bad News For Wal-Mart?

Published on: December 6, 2003

After a couple of months filled with reports of illegal workers, strong arming suppliers, and a consumer being trampled over a cheap DVD player; Wal-Mart has gone out of their way to further alienate their shoppers and get their name in the headlines. Starting February 1, 2004, Wal-Mart will no longer accept MasterCard debit cards.

Earlier this year, MasterCard and Visa settled for a $3 billion lawsuit filed by Wal-Mart and other retailers claiming that the card companies were illegally forcing them to accept debit cards as a condition for being allowed to accept their credit cards. Wal-Mart says that they will no longer accept the MasterCard signature debit card, because they feel the current fees are simply too high for a product that is less secure and less efficient than the PIN debit card. Wal-Mart says that they chose to eliminate the option rather than pass the costs on to customers.

Wal-Mart customers will continue to be able to use MasterCards for credit card transactions as well as for debit card transactions if they are PIN-based and not signature-based. Sounds a bit too complicated to deal with at the checkout; where shoppers will no doubt feel embarrassed or angry when they are told that their preferred method of payment won't be accepted.

It is expected that the Wal-Mart decision could have broad ramifications as most other major retailers are in the process of renegotiating their agreements with MasterCard and Visa.

Expect lots of confusion and lots of advertising designed to reduce confusion. Perhaps both Master Card and Wal-Mart would save a lot more money and goodwill if both sides would have compromised just a bit more.

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