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Walmart Canada won’t take Visa. Here’s why you should care.

Walmart has thrown down the gauntlet in a battle that has been raging between retailers and credit card companies for years. The behemoth retailer will soon stop accepting Visa cards at its Canadian stores – all 405 of them.

American stores will still accept cards, but that doesn’t mean Western New Yorkers won’t be affected by the brouhaha. The battle lines that have been drawn north of the border are bound to reach the United States eventually, experts said.

The fight centers on swipe fees, the money retailers pay credit-card-issuing banks to process payment transactions. Walmart said Visa’s rates are “unacceptably high.” Visa counters that it offered Walmart one of the lowest rates in the country.

Retailers have long fought for lower swipe fees, saying the expense cuts into profits and results in higher prices for consumers. Swipe fees in the United States were capped in 2011 as part of an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, reducing the average transaction fee from 44 cents to 24 cents. Canadian retailers don’t receive the same protections.

But credit card companies have always had the upper hand. A whopping 78 percent of purchases were made with credit or debit cards in 2015, according to If retailers don’t accept cards, they’ll lose business.

That’s why the situation in Canada is momentous. As the world’s second-largest retailer, Walmart has the clout to take a stand that matters.

“It’s going to happen in the United States as well,” said Lewis Mandell, a finance professor at the University at Buffalo School of Management. “Walmart is sending a message to all credit card purveyors.”

It throws Visa’s dominance into question at a time when many experts think the payments industry is due for disruption.

“That’s what all of this is moving toward, I think,” said Bill Hardekopf, CEO of

Some hope that payment system revolution will come in the form of bitcoin, a digital fringe currency that operates independently of banks. Bitcoin costs a fraction of a percent to use and requires no middleman. Its encryption also alleviates another major qualm retailers have with banks – vulnerability to fraud and charge-backs.

Retailers have already dabbled with alternative payment methods, including a retailer-controlled mobile payments platform called CurrentC that works outside credit card networks and costs less. This could be the momentum they need to start the switch away from the major credit networks.

Still, if retailers succeed in lowering swipe fees, consumers could lose out on some credit card perks they’ve grown accustomed to, Mandell said.

Premier credit cards, which reimburse consumers with frequent flier miles or cash back, are expensive to maintain. They end up being subsidized by middle-income and lower-income consumers – precisely those who shop at Walmart, he said.

Swipe fees are negotiated in private, with large retailers like Walmart able to negotiate much lower rates than small, independent stores. On average, $2 of every $100 purchase made with a debit or credit card goes toward payment processing.

It’s not the first time Walmart has locked horns with Visa. It was among those that sued Visa and MasterCard over high fees in 1996. In 2013, Walmart sued Visa for $5 billion. The latest throwdown brings the issue to the fore.

Other retailers have put pressure on card companies, too. In 2014, Costco stopped accepting American Express at its Canadian stores and began taking MasterCard exclusively. In the states, Costco accepts only Visa. Both Visa and MasterCard have lowered fees in Canada after being pressured to do so by the Canadian government.

Earlier this week, Home Depot sued Visa and MasterCard over high fees and market dominance.

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