Bank of WalMart? Sam’s Club to Shrug off Visa/MC

WalMart cardI just got this interesting bit of news from a Sam’s Club sales representative who was going door-to-door in the area and handing out flyers for Sam’s Club. The news is that Sam’s Club will be ceasing all credit card transactions beginning September 22nd except for it’s own card and Discover. The news will no doubt come as a warning shot to Visa and Mastercard who have long battled WalMart over customer rights to use debit cards and transaction fees. Sam’s Club is the food club subsidiary of WalMart.

An earlier settlement, WalMart -vs- Visa and MasterCard, set the stage for WalMart to start shopping around for banks. An analysis of events surrounding the settlement led the Takoma Group to surmise the bank-shopping in WalMart Settlement Could Reshape Bankcard Biz:

Two states already have denied WalMart requests to buy industrial banks. (An industrial bank is a limited purpose financial institution that can be owned by a non-financial company.) Last month, TD Bank USA, a unit of Canada?Äôs Toronto Dominion Bank, backed away from a plan to partner with WalMart in offering store-branded checking and savings accounts.

WalMart isn?Äôt known for backing off once it sets its sights on a market opportunity, and there are at least a half-dozen states that charter industrial banks. I don?Äôt think we?Äôve seen the last of WalMart shopping around for a bank.

Indeed, WalMart may have chosen the Sept. 22 date as it’s switchover date as it signs new customers up for banking and credit card services. While I haven’t heard of WalMart acquiring a bank yet, they may be close enough to signing a deal that they are willing to shut out competitors in their stores. If my guess is right, I expect the “WalMart card” to be another universally accepted card, and competitive. Which would be a good thing for consumers.

My take on this
I think WalMart is skirting anti-trust laws on this one, but still staying in the legal realm. They have no obligation to take Visa or MasterCard at all (and shouldn’t), but if the only option for payment was their own credit card (and cash was declined as well), I could see a problem and obvious abuse under trust laws. Visa/MasterCard may sue WalMart for the loss of access, but they should not win this one.

UPDATE: To clarify what is accepted: On April 21st 2004 Sam’s Club announced that it would quit taking Visa and MasterCard credit cards, but would still take Visa/MC debit cards. This policy is now being changed again and they are going to refuse all Visa/MC backed cards. The Philly Inquirer has the full details of what occured in the settlement in Consumer Watch | A new move on credit cards.

WalMart Settlement Could Reshape Bankcard Biz [Takoma Group]
Consumer Watch | A new move on credit cards [Philly Inquirer]

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