Walmart Sues Visa over Debit Verification Rules
Walmart has filed a lawsuit against Visa Inc. over claims that the payment network is forcing Walmart to offer customers the option to verify EMV debit card purchases via signature—a method the retail giant says is more prone to fraud than PIN verification. Signature transactions also are more expensive for Walmart. Filed in New York State Supreme Court, the suit claims Visa earlier this year compelled Walmart to stop requiring PIN authorization for EMV-equipped debit cards and instead offer EMV debit users the option of signature or PIN verification.
The suit alleges that Visa was motivated by the fact that signature transactions must run on Visa’s payment rails, while merchants have the option of routing PIN transactions through a non-Visa network. Walmart pays Visa about five cents more for a signature transaction than for a PIN transaction, according to a Wall Street Journal report citing a source familiar with the rates.
The suit claims that by requiring Walmart to offer signature verification—which must go through its own payment rails—Visa is in violation of the Durbin Amendment requirement that networks and issuers give merchants the option of at least two unaffiliated networks through which to route any transaction. (MasterCard confirmed it does not require merchants to offer signature verification for debit purchases.) While only 10 percent of debit card purchases at Walmart are verified via signature according to the WSJ report, debit accounts for 70 percent of Walmart’s sales volume, the lawsuit notes. And with $350 billion in sales during its 2016 fiscal year, the purchase dollar volume of Walmart’s signature-verified debit purchases works out to nearly $25 billion.
The lawsuit is the latest legal battle between Walmart and Visa, which last year reached a settlement agreement over a long-running case involving interchange fees.