Kroger Latest Merchant to Challenge Visa Debit Verification Rules
Grocery giant Kroger Co. has filed a lawsuit against Visa Inc. over the payment network’s rules for verifying EMV debit card transactions. First reported by the Wall Street Journal, the suit is based on similar issues as those in a legal challenge by Walmart, which sued Visa in May. Both lawsuits center on Visa’s requirement that merchants give customers the option of verifying EMV debit purchases via signature—a method the plaintiffs say is less secure and more prone to fraud that PIN authorization. PIN transactions also can be routed through competing networks’ payment rails, while signature transactions must run on Visa’s network.
In its lawsuit, Walmart claims that requiring a signature option is in violation of the Durbin Amendment requirement that merchants have the option of at least two unaffiliated networks through which to route any transaction. (MasterCard does not require merchants to offer signature verification for debit purchases.)
Kroger said Visa has levied fines of $7 million related to the store’s refusal to enable signature verification and has told the grocery chain it will raise fees for debit transaction processing, according to the WSJ report. The network also has threatened to cut off Kroger’s ability to accept Visa debit cards, the report said. Kroger operates more than 2,700 stores in 35 states, under brands including Ralph’s, Harris Teeter and Fred Meyer. The company processed $29 billion in Visa debit transactions last year, the WSJ reported.