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Visa sues Walmart over Chip and PIN policy

30 June 2016  |  7003 views  |  0 signature

The strained relationship between Visa and Walmart is reaching breaking point as the card scheme files a lawsuit against the supermarket chain for allegedly reneging on an agreement to allow the use of signature verification alongside Chip and PIN for transactions at the till.

In its suit, Visa claims that Walmart has secretly been testing a protocol that eliminates the need for signature verifications for transactions paid for with a Visa debit card.

The card scheme says it only became aware of the issue following a drop in debit card transactions at Walmart stores amid complaints from cardholders that they were unable to use their cards to make payments at the check out.

In May, Walmart filed a legal challenge over Visa's failure to mandate the use of Chip and PIN payments, contesting that the continued use of signatures at the checkout creates an "unacceptable risk" to customers.

This was followed in June by a decision by Walmart to refuse to accept Visa credit cards in its 370 stores across Canada. In announcing its decision, the store claims that its Canadian arm pays over $100 million in credit card fees each year.

At the heart of the issue is Visa's continued control of the transaction during a signature checkout. PIN transactions, in contrast, can be routed through cheaper third party networks.

Walmart has since been followed into the courts by rival supermarket chain Kroger and big box retailer Home Depot who have also taken legal advice over the issue.

In a statement, Walmart spokesman Randy Hargrove says: "We have rightfully insisted on the use of PINs for debit card transactions in our stores, while Visa has continued to demand the more fraud-prone signature verification which is more profitable to them."
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