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Post Reply Wal-Mart Sues Visa Over Transactions
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Posted 5/11/16
http://www.wsj.com/articles/wal-mart-sues-visa-over-chip-enabled-debit-card-transactions-1462906677?mod=e2fb

In the latest battle over chip-enabled plastic, Wal-Mart Stores Inc. sued Visa Inc. for the right to choose how customers verify debit-card purchases at the checkout counter.

The retail giant wants customers to verify their purchases with a personal identification number when they use a chip-enabled debit card. In the lawsuit, filed in New York state court Tuesday, Wal-Mart said Visa has prohibited it from requiring PINs only, forcing the retailer to allow customers to use a signature in those transactions.

The lawsuit is the latest salvo between the two companies, which have sued each other multiple times over assorted payments issues. It also could stoke the continuing debate about how to balance security and convenience with the new generation of chip-enabled cards.

Shoppers and merchants alike are in a period of transition at the checkout line as they adjust to the new, more secure chip cards that banks are sending to their customers.

The cards, which are inserted at a payment terminal instead of swiped, are causing confusion among customers who must still swipe them at stores that haven’t adopted the new technology. Some merchants and customers also have complained that transactions take longer to process using the chip cards.

Wal-Mart was one of the first big retailers in the U.S. to start accepting chip cards last year.

While consumers typically use a PIN when using their debit card at an ATM, some shoppers opt to sign for purchases made with a debit card when they are in a store.

Visa has long required merchants to give customers the choice of signing or entering a PIN, and the company has said some shoppers want that flexibility.

Visa also maintains control of the transaction with the signature method, since merchants have the ability to route PIN transactions through a non-Visa network. Visa’s rules are different than those of MasterCard Inc., which lets merchants decide how they want customers to verify payments, according to people familiar with the matter.​

The dispute also involves money: Wal-Mart pays Visa about five cents more per signature transaction than it does for those that use a PIN, said a person familiar with the rates.

A Visa spokeswoman declined to comment on the lawsuit.

Wal-Mart says it prefers PINs because they are more secure than signatures. Debit cards are the most frequently used form of payment at Wal-Mart, accounting for more than 70% of the dollar value of card payments, the retailer said in the lawsuit.

“This suit is about protecting our customers’ bank accounts when they use their debit cards at Wal-Mart,” the Bentonville, Ark.-based retailer said in a statement.

Wal-Mart last year started requiring PINs for chip-based debit cards, declining transactions if a customer refused to enter the identification code. Wal-Mart then changed the practice to allow for signatures after Visa required it to do so, citing the terms of its contract with the retailer.

Visa “has demanded that we allow fraud-prone signature verification for debit transactions in our U.S. stores because Visa stands to make more money processing,” Wal-Mart said.

Wal-Mart now prompts shoppers for PINs when they use their debit cards, but they can override that prompt and sign instead. Now about 10% of debit-card users sign instead of entering a PIN to verify their purchase, says a person familiar with Wal-Mart’s customer data.

The retail behemoth is pinching every penny as it invests over $5 billion in store and e-commerce improvements to fend off growing competition from Amazon.com Inc. and other retailers. Earlier this year it closed more than 150 U.S. stores and has predicted that profit will fall by as much as 12% in the current fiscal year, before seeing the results of those investments.

The chip cards create a unique verification code for each transaction, making it more difficult for fraudsters to produce counterfeit cards.

Many retailers and security experts say that the new cards—both debit and credit—would be even more secure if customers are required to enter a PIN, as is the custom in most countries where the cards are prevalent. Most U.S. banks, which issue the cards, have opted for the signature option for credit cards. They say they don’t think shoppers want to have to remember another PIN and prefer instead to sign for purchases.

Many retailers have since allowed shoppers to use competing mobile payment systems like Apple Pay that work with credit cards. Even Wal-Mart launched its own mobile payment system that allows shoppers to pay at a register with any information stored in their Walmart.com account, including credit cards. The system is still being tested in a limited number of Wal-Mart locations, mostly in Texas, Oklahoma and Arkansas.

The lawsuit is the latest in a number of long-running disputes between Visa and Wal-Mart, which have been locked in litigation over assorted issues for years.

Wal-Mart and other merchants sued Visa in 1996 over a policy called “honor all cards” that forced merchants to accept both credit and debit cards. The case was settled in 2003 on the night before it was to go to trial, with Visa agreeing to pay $2 billion to retailers and lower the fees it charged to merchants for debit-card transactions.

Wal-Mart also sued Visa in 2014 for more than $5 billion over card fees charged to merchants, known as “interchange.” The companies settled the case last year.

Wal-Mart has long worked to find ways to avoid paying credit-card fees. Four years ago it joined a group of retailers and restaurant chains to create the Merchant Customer Exchange, an organization tasked with creating a mobile payment system that circumvents credit-card payments by allowing shoppers to pay with their smartphones. The organization has struggled to roll out a viable product quickly.
runec 
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Posted 5/11/16 , edited 5/11/16
Wait, chip cards are "new" in the US? And you can verify a debit card with a signature?

That sounds like a terrible idea.




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Posted 5/11/16 , edited 5/11/16

runec wrote:

Wait, chip cards are "new" in the US? And you can verify a debit card with a signature?

That sounds like a terrible idea.






Yup they are new in the USA and they barely work. Yup you can verify debit cards with signatures.

Credit card companies haven't wanted to change because it puts more liability on them and stores haven't wanted to change due to the costs.
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Posted 5/11/16 , edited 5/13/16
What ass backward backwater is the USA? Christ chip cards came out in Canada ..like when I was still in the freaking 7th or 8th grade of highschool..probably earlier that's just when I noticed they were everywhere. And it's when I opened my first account and got my own card..a chip card.

There haven't been any major issues with them up here. Ya telling me you Yanks will spend twenty billion dollars developing smart bombs but can't get a debit card to work You lot need to get your priorities straight, it's no wonder you lot owe money to the PROC.
Posted 5/11/16

Ranwolf wrote:

What ass backward backwater is the USA? Christ chip cards came out in Canada ..like when I was still in the freaking 7th or 8th grade of highschool..probably earlier that's just when I noticed they were everywhere. And it's when I opened my first account and got my own card..a chip card.

There haven't been any major issues with them up here. Ya telling me you Yanks will spend twenty billion dollars developing smart bombs but can't get a debit card to work You lot need to get your priorities straight, it's no wonder you lot owe money to the PROC.


>> easy Ran its just Wallmart the cheap shop shoppers Lol..
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Posted 5/11/16 , edited 5/13/16

Ranwolf wrote:

What ass backward backwater is the USA? Christ chip cards came out in Canada ..like when I was still in the freaking 7th or 8th grade of highschool..probably earlier that's just when I noticed they were everywhere. And it's when I opened my first account and got my own card..a chip card.

There haven't been any major issues with them up here. Ya telling me you Yanks will spend twenty billion dollars developing smart bombs but can't get a debit card to work You lot need to get your priorities straight, it's no wonder you lot owe money to the PROC.


this
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Posted 5/11/16 , edited 5/11/16

Ranwolf wrote:

What ass backward backwater is the USA? Christ chip cards came out in Canada ..like when I was still in the freaking 7th or 8th grade of highschool..probably earlier that's just when I noticed they were everywhere. And it's when I opened my first account and got my own card..a chip card.

There haven't been any major issues with them up here. Ya telling me you Yanks will spend twenty billion dollars developing smart bombs but can't get a debit card to work You lot need to get your priorities straight, it's no wonder you lot owe money to the PROC.


This is one of the reasons I'm always complaining about infrastructure. The US is waaaaaay behind on pretty much everything that isn't military. There are too many stagnant industries and the government spending isn't going where it needs to go.
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Posted 5/11/16
I went to a Walmart 3 times with a Visa chip card and never has the thing once asked for my signature, always my pin. So this isn't fair because not every Walmart does this, but since it does happen, this is the most idiotic thing I've heard.

You can just draw a dick and it would accept it as a signature. The question is, is Visa the only company that does this? Because if not, this needs to not be a thing for every store and credit card company. No wonder identities get stolen and hackers are so prominent.

But the chip card thing happening now... come on. This is why I'm moving back to Europe after I get my master's or my doctorate...
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Posted 5/11/16

Ranwolf wrote:

What ass backward backwater is the USA? Christ chip cards came out in Canada ..like when I was still in the freaking 7th or 8th grade of highschool..probably earlier that's just when I noticed they were everywhere. And it's when I opened my first account and got my own card..a chip card.

There haven't been any major issues with them up here. Ya telling me you Yanks will spend twenty billion dollars developing smart bombs but can't get a debit card to work You lot need to get your priorities straight, it's no wonder you lot owe money to the PROC.


The problem is the people don't get to choose what we think is important, the government does. I totally agree with you. Land of the brave and home of the free my ass... but it could be worse I guess. But if Trump becomes president, might as well name it North Korea #2.
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Posted 5/11/16

MoxiRoxi wrote:
. But if Trump becomes president, might as well name it North Korea #2.


Hey man don't even joke about that I live within spitting distance of the US border. And the uniform in my closet means I just can't move as far away as physically possible.
Posted 5/11/16
Let's not kid ourselves, chip and pin isn't exactly a bastion of security either. Point of sale vulnerabilities and flaws in the EMV protocol leave them quite vulnerable to many attacks like card skimming. The only reason Visa and Mastercard are transitioning is because they get to shift the liability for fraud on to retailers. According to Nasdaq %45 of card fraud is online, which chip and pin doesn't help.
http://www.nasdaq.com/article/credit-card-fraud-and-id-theft-statistics-cm520388
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Posted 5/11/16

Ranwolf wrote:


MoxiRoxi wrote:
. But if Trump becomes president, might as well name it North Korea #2.


Hey man don't even joke about that I live within spitting distance of the US border. And the uniform in my closet means I just can't move as far away as physically possible.


Better get started building that wall

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Posted 5/11/16 , edited 5/11/16

Rujikin wrote:

Yup they are new in the USA and they barely work. Yup you can verify debit cards with signatures.

Credit card companies haven't wanted to change because it puts more liability on them and stores haven't wanted to change due to the costs.


Sorry, but you're wrong about that. Credit card companies (or financial institutions in general, really) have always had the liability with card-present transactions. The chip card liability shift is that merchants will now be liable in certain situations if the card is a chip card and the merchant doesn't have a machine that accepts chip cards. The reason that financial institutions have not wanted to change was because their customers wouldn't be able to use their chip card as a chip card card anywhere in the US, and the non-US chip cards required a PIN which is typically not used in US card transactions, so it would be an adjustment for card users. Merchants didn't want to change due to costs.

As for the original post, Walmart doesn't care about how secure signature transactions are, it is all about the money.

Edit:
Corrected area where liability shift occurs.
runec 
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Posted 5/11/16

Rujikin wrote:
Yup they are new in the USA and they barely work. Yup you can verify debit cards with signatures.

Credit card companies haven't wanted to change because it puts more liability on them and stores haven't wanted to change due to the costs.


Sheesh. The only places up here that don't have chip & pin these days are yard sales.

I didn't know non-structural infrastructure was that bad down there. That's kinda nuts.

Meanwhile, congress keeps ordering tanks.
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Posted 5/11/16 , edited 5/13/16
Seems nobody is smart enough to be able to tell the difference between private COMPANIES and GOVERNMENT CONTRACTS.

Also, they aren't ordering new armor.

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