Recently we came across this interesting article and announcement that Walmart will no longer be accepting Visa cards as payment in Canada, with a phase out beginning July 2016 across their stores. Citing high transaction fees as their reasoning, the world's largest retailer appears to be throwing their weight around to get what they want. This move is an interesting one as it essentially creates one big game of Chicken between the retail giant and credit card heavy weight and we are waiting to see who will blink first and make a move.
Visa has since made a statement that the credit card company offered Walmart "one of the lowest rates available to any merchant in the country." As small business owners, we are conflicted over the moves Walmart is making. Knowing that they pay a smaller fee for credit card transactions than we do despite having larger margins and higher profits, it is hard to side with the Big Guy. On the other hand, perhaps Walmart is paving the way for all retailers, both large and small, to get a reduction in Visa transaction fees. This play seems mostly self serving, however, as Walmart in the end will benefit from an increased number of customers signing up for their Walmart MasterCard as well as an increase in payments made by cash or debit where the fees are either non existent or a few pennies per transaction. Overall this is mostly a win-win situation for Walmart as they will see profits rise and expenses fall, with a net effect of improving their bottom line. Knowing that Canadians typically have more than one form of plastic payment in their wallet, Walmart is banking on the fact that customers will just use an alternate method of payment. But do customers see that savings Walmart receives coming back to them when they pay cash and save them the transaction fees? Not likely. In fact, Walmart will charge you $0.05 if you decide that you need a plastic bag for that purchase, so they are definitely not concerned about passing these transactional savings on to the consumer.
Canadian small businesses typically pay a fee of 2-3% of each credit card sale (vs Walmart's rumoured 1%), and while this can be difficult when you are working with less resources than the Big Guys, we know that offering all possible forms of payment is necessary to maintain good customer service. This is yet another reason we love to support and shop local as the customer experience is usually the main focus instead of a constant focus on profits and squeezing the consumer and their suppliers to improve their bottom line. Our customers are at the heart of everything we do and we will continue to offer these options to you despite the trend among giants like Walmart and Costco to limit your choice in payment. While these big businesses bully one another, we will sit back and enjoy being small enough to enjoy our customers, to appreciate that each sale helps our little Lousje & Bean family continue to do what we love- and what we love is making unique, classic pieces for you!