business news in context, analysis with attitude

The Wall Street Journal reports that "Visa Inc. fired back at Wal-Mart Stores Inc. in a legal dispute over letting customers authorize a debit-card transaction with a signature, saying that the retailer secretly configured its payment terminals so only personal identification numbers, or PINs, could be used.

"Visa said it received complaints from customers who could no longer use their debit cards at Wal-Mart stores unless they had a PIN," and charged that Walmart's move "violated the contract that the companies had negotiated in which Visa told the retailer that customers must be given the choice of using a signature."

The story notes that Walmart sued Visa last month, saying that PIN-based transactions are both more secure and less expensive to process. But the banks prefer signatures since they have healthier profit margins attached to them.

The suit against Walmart comes just days after Kroger sued Visa over debit card transactions, charging that it was being penalized by the company because it was pushing customers to use PIN-based payment verification instead of signatures.

“We have rightfully insisted on the use of PIN 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,” Walmart replied on Wednesday in a prepared statement.
KC's View:
I continue to believe that retailers have the high road on this one, and that they need to invest in a major PR campaign against the credit/debit card companies that establish the retail sector as being on the side of consumers. Of course, that's probably against the rules of the game as dictated by the card companies. So maybe FMI or NGA or NRF or NACS could figure out a way to fight the war for them.