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Businesses The Almighty Buck

Wal-Mart Sues Visa For $5 Billion For Rigging Card Swipe Fees 455

Hugh Pickens DOT Com writes: "Reuters reports that Wal-Mart has sued Visa for $5 billion, accusing the credit and debit card network of excessively high card swipe fees. Wal-mart is seeking damages from price fixing and other antitrust violations that it claims took place between January 1, 2004 and November 27, 2012. In its lawsuit, Wal-Mart contends that Visa, in concert with banks, sought to prevent retailers from protecting themselves against those swipe fees, eventually hurting sales. 'The anticompetitive conduct of Visa and the banks forced Wal-Mart to raise retail prices paid by its customers and/or reduce retail services provided to its customers as a means of offsetting some of the artificially inflated interchange fees,' says Wal-Mart in court documents. 'As a result, Wal-Mart's retail sales were below what they would have been otherwise.' Interchange fees, the industry term for card-swipe fees, have been a major point of contention between retailers and banks. The fees are set by Visa and other card networks and collected by card-issuing banks like J.P. Morgan Chase & Co. Retailers have argued that the fees had been set too high due to a lack of competition with the two payment industry giants.

Wal-Mart also took a shot against Visa over payment card security. Data breaches last year at Target Corp., Neiman Marcus and others have drawn attention to the country's slow adoption of card technology that uses computer chips and PIN numbers and is seen as less susceptible to fraud than the current system of magnetic stripes. 'Wal-Mart was further harmed by anti-innovation conduct on the part of Visa and the banks,' says the lawsuit, 'such as perpetuating the use of fraud-prone magnetic stripe system in the U.S. and the continued use of signature authentication despite knowledge that PIN authentication is more secure, a fact Visa has acknowledged repeatedly.'"
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Wal-Mart Sues Visa For $5 Billion For Rigging Card Swipe Fees

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  • by CajunArson ( 465943 ) on Friday March 28, 2014 @08:53AM (#46601515) Journal

    Bitch about Walmart employees all you want, but if you want to see a perfect model of a *NON* flashy HQ and *NON* flashy executives who practice what they preach, then Walmart is a perfect example of how to do things.

  • Re:Bitcoin (Score:5, Interesting)

    by CastrTroy ( 595695 ) on Friday March 28, 2014 @09:02AM (#46601555) Homepage
    Bitcoin might be a bit extreme, as most of their customers have no idea what it is, but why not encourage customers to use cash then? Make some checkout lines cash only. If you want to pay with Visa, you get the slow line. Give customers a cash discount. Visa tries to make people not pay extra for using their card, but I've seen plenty of businesses get around the rules by offering cash discounts.
  • by Fulminata ( 999320 ) on Friday March 28, 2014 @09:11AM (#46601625)
    Wal-Mart competes primarily on the illusion of price through loss leaders on a minority of items. The majority of their stock is actually the same or more expensive than many of their competitors. The company's actual strengths are logistics and marketing.
  • by sjbe ( 173966 ) on Friday March 28, 2014 @09:13AM (#46601649)

    I'm rather sure that Walmart doesn't pay the full 3% that Visa/MasterCard like to charge for transactions

    No, they don't in a lot of cases but the amount they do pay is VERY substantial. We're literally talking about billions of dollars here no matter what exact amount Walmart pays.

    but when you look at the overhead of transactions in the cryptocurrency markets, you can see how ridiculously overpriced the credit card transactions are. The costs here are near 0, and so should the charges be

    The cost of credit card transactions are nowhere near zero. Transaction processing in any form is not cheap, even at high volumes. There are significant costs for both on the front end (credit card machines + computers + accounting + banking fees), and on the back end (computers, customer service, accounting, security (yeah, ironic I know), billing, payment transaction costs, marketing, and more). While I agree completely that credit card companies overcharge, the assertion that their costs are anywhere close to zero is not supported by the facts. Building a payment infrastructure like the one Visa has costs many billions of dollars to build and more billions to operate on an ongoing basis.

    Furthermore if you are going to make the absurd comparison between bitcoin and credit cards, you need to account for ALL the costs including currency exchange fees, exchange rate risk, opportunity cost, infrastructure cost (which bitcoin lacks), customer service (which bitcoin lacks), counterparty risk (no one is going to give you a refund), accounting, and the rest of them. Once you account for what bitcoin really costs and what it lacks, the cost of it is actually higher in most cases on a risk adjusted basis. (and if you aren't accounting for risk then you are being really really foolish)

  • by ShanghaiBill ( 739463 ) on Friday March 28, 2014 @09:23AM (#46601735)

    Wal-Mart competes primarily on the illusion of price through loss leaders on a minority of items. The majority of their stock is actually the same or more expensive than many of their competitors.

    Citation? There is a Safeway, Lucky's, and Wal-Mart equidistant from my house. I went to all three and priced out a typical cart of groceries, and Wal-Mart was significantly cheaper on EVERY SINGLE ITEM. Overall, I save about 20% by shopping there.

  • by alen ( 225700 ) on Friday March 28, 2014 @09:27AM (#46601773)

    yeah, meanwhile all the heroic family owned businesses in NYC are fighting a new proposed law to give employees at any business with more than 5 employees 5 paid sick days per year separate from vacation days

    and i hear they all offer at least some health, pension benefits and the ability to be promoted into management of the family business

  • by ShanghaiBill ( 739463 ) on Friday March 28, 2014 @09:33AM (#46601815)

    And because Wal-Mart's a horrible corporate "citizen", *we* get to make up the wage difference for their employees in the form of food stamps & other government assistance.

    If they raised wages, we would have to pay more on food stamps, because they would hire different people, and their current employees would likely be unemployed. Have you ever been to Wal-Mart? My local store employs a woman in a wheelchair, and two people that appear to have Down's Syndrome. Most of their other employees don't look much brighter. These people get paid $10 per hour because that is what they are worth. If Wal-Mart is forced to raise wages, then they will pull more capable people from other more useful employment, and their current employees would get pink slips.

  • by Jaysyn ( 203771 ) on Friday March 28, 2014 @09:50AM (#46601991) Homepage Journal

    That is some really specious logic there. The odds are those people aren't getting $10 an hour.

    "Walmart jobs are poverty-level jobs.
    Walmart’s average sale Associate makes $8.81 per hour, according to IBISWorld, an independent market research group. This translates to annual pay of $15,576, based upon Walmart’s full-time status of 34 hours per week. This is significantly below the 2010 Federal Poverty Level of $22,050 for a family of four."

    http://makingchangeatwalmart.o... []

    Also, any company can get a tax break for hiring disabled folks. The Publix down the street from me has at least two people working there with Downs & I'd bet dollars to donuts they are getting paid a living wage.

  • by ShanghaiBill ( 739463 ) on Friday March 28, 2014 @09:58AM (#46602069)

    Citation here: []

    If you drill down to the actual study, what they found was that Target was cheaper than Wal-Mart by 0.46% for ONE MONTH. The preceding months, Wal-Mart had been cheaper by over 2%. So this was apparently a blip caused by some one-off sales at Target.

  • by Andy Dodd ( 701 ) <atd7.cornell@edu> on Friday March 28, 2014 @10:16AM (#46602225) Homepage

    Now, they likely do have some valid complaints here.

    But bitching about a slow transition away from magnetic stripe cards when *you are one of the last retailers to install NFC payment terminals* and more importantly *knowingly skipped the start of migration during your last payment terminal upgrade cycle* is bullshit.

    Now, I can understand if maybe Walmart were just at the wrong point in the upgrade cycle and hadn't upgraded their terminals in years, but I know for a fact that nearly every Walmart I've been to in the last year has upgraded their terminals in that time period and, despite many of their competitors having NFC payment terminals for a few years, Walmart did *not* upgrade to terminals that were capable of anything but magswipe.

    Target appears to have deployed terminals that look NFC-ish but aren't, and did so before the NFC rollout started and hasn't done another deployment since then, so they do have an excuse.

  • by Phreakiture ( 547094 ) on Friday March 28, 2014 @10:44AM (#46602535) Homepage

    Aldi is also a very interesting case study in store efficiency.

    Most of their stores that I have seen have four aisles. Coming in the door dumps you into aisle 1. Most traffic in aisles 1 and 3 is heading to the back of the store and most in aisles 2 and 4 is heading to the front.

    Every one of the store products has at least two copies of the barcode on the package, and many times more than two. In one extreme case, I saw a barcode turned into package decoration by wrapping it all the way around the bag.

    Of course, that last one wouldn't work well if things double-scanned, so the cash registers have a duplicate code lockout on them, and the cashiers are trained to group and count, and use the '@' button on their cash registers.

    Checkout lanes have very long conveyor belts on them so that 2-3 customers can be unloading their carts at once without getting in each others' way.

    Cashiers sit, rather than stand, in order to lower fatigue and improve productivity.

    The till is arranged like a vertical file with a lid that pops open in front of the scanner. This is because, with the cashier seated, a cash drawer would collide with him/her requiring him/her to move his/her seat to slide it all the way open. It pops open driven by a spring at the appropriate moment in the transaction, and closes with less effort than a cash drawer, again, reducing fatigue.

    Oh, and last but not least, staff are actually paid decently.

  • That's Odd (Score:5, Interesting)

    by Greyfox ( 87712 ) on Friday March 28, 2014 @11:14AM (#46602937) Homepage Journal
    I'm not a huge Walmart fan, but I'm a bit surprised they don't just bring their own card to the market, then. They wouldn't even have to be terribly competitive, just anally rape you just a little less than the other credit card companies. The money they'd save on transaction fees in their own stores alone would probably more than cover the cost of the venture.
  • by ScooterComputer ( 10306 ) on Friday March 28, 2014 @11:35AM (#46603183)

    Hrm. I'm glad someone is finally stepping up to confront the assholishness of the credit card processors and their crazy fees. But I just voted for Walmart in the Worst Company in America tourney at []. I'm starting to think I should have picked Abercrombie & Finch instead.

  • by Anonymous Coward on Friday March 28, 2014 @11:44AM (#46603303)

    Dutch guy here: I've never in my 30 years seen a supermarket with cashiers who stand up. Is this a normal thing in America?

  • by mspohr ( 589790 ) on Friday March 28, 2014 @01:07PM (#46604221)

    The Walton family still has control of the company, owning just more than half of its shares.
    The Walton family has more wealth than the entire bottom 42% of the US population. []
    They have the control and the wealth. They could pay their employees a living wage and give them decent benefits but it is cheaper to put them on food stamps and Medicaid and have the taxpayer subsidize their employees... this leaves more money for the Waltons.

No problem is so large it can't be fit in somewhere.