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October 24th, 2005 by Jamie Estep

The Effects of Walmart Suing Visa and MasterCard!

Filed in: Ecommerce, Merchant Accounts, My Favorite Posts | 1 comment

If you’ve been reading the news over the past few years, you may remember that Walmart has sued Visa and MasterCard several times. While most people don’t remember or care about what Walmart was suing over, corporate lawsuits are about as common as people, the effects of these lawsuits probably have had a direct affect on your business.

Back in 2003, Walmart and thousands of US based businesses won a class action lawsuit against Visa and MasterCard. When the dust settled, there was a 3 billion dollar settlement, and Visa and MasterCard were forced to abandon their coveted ‘all cards accepted policy’.

So, What exactly did this do?
The all cards accepted policy, ensured that if you accepted any credit cards, then you must accept all credit cards. Specifically, you had to honor Visa or MasterCard debit cards in addition to Visa and MasterCard credit cards.

The lawsuit changed the structure of the processing industry removing the all cards accepted policy.

Thats about it….

How does this affect US businesses?
While Walmart was celebrating a huge victory over Visa and MasterCard, they forgot that the ones they were suing were also the ones who set the processing rates for nearly every business in the country, and the world.

What does a business do when it looses a lot of money to the people that they provide their service to?

They raise their prices…

Visa and MasterCard removed the all cards accepted policy, and then raised interchange processing rates, 4 times in a single year. The money that Visa and MasterCard lost, would be quickly made up in extra interchange fees, and the people that end up loosing in the end. The normal US businesses.

Walmart gets to accept Visa or MasterCard, debit or credit in whatever manner they want, and everyone else gets to pay a lot more to process credit cards.

Ironically Walmart hasn’t changed their acceptance policies even though they won the lawsuit…

One Response to “The Effects of Walmart Suing Visa and MasterCard!”

  1. Anon July 1, 2006 at 3:54 am

    If this were a conspiracy, then Walmart could be using exactly this effect to destroy competition in its low margin environment.

 

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