Visa offers consumer incentives as war against Walmart heats up
Analyst says credit card firm's offer is sign of aggression
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This article was published 03/11/2016 (2403 days ago), so information in it may no longer be current.
Visa Canada has taken its bitter fee dispute with Walmart Canada to the next level, by offering to reward its Manitoba cardholders if they buy their groceries from someone other than Walmart.
The credit card giant has launched an advertising campagin that offers a $10 credit to cardholders who spend $50 or more at grocery stores in Manitoba. To qualify, all they have to do is enrol their credit card number before Nov. 30 at visa.ca/Manitoba, and make their qualifying purchase within 15 days of enrolling.
The ad doesn’t mention Walmart or the fee dispute the companies have been embroiled in since last summer. But the offer clearly has the potential to impact Walmart because, as of Oct. 24, it no longer accepts Visa card at its 16 Manitoba stores.
Spokespersons for Visa Canada and Walmart Canada downplayed the significance of the latest move by the credit card company. Visa Canada spokesperson Carla Hindman said it’s not unusual for the company to conduct promotions that encourage cardholders to use their Visa cards in new and different places.
Asked if this particular promotion was aimed at encouraging them to buy their groceries from someone other than Walmart, Hindman said, “We hope this eases the inconvenience for Visa cardholders in Manitoba who cannot use their card everywhere they may want to.”
When asked for Walmart Canada’s reaction to the Visa ad, company spokesman Alex Roberton said, “We don’t comment on how other organizations want to promote their brand.”
One Canadian food-industry analyst — Prof. Sylvain Charlebois, from Dalhousie University in Nova Scotia — described this latest move by Visa — it also ran newspaper and billboard ads last month pointing out its cards are accepted at more than 28,000 other stores in Winnipeg — as interesting and unusual.
Charlebois said credit card companies in Europe have been known to be pretty aggressive at times, but that isn’t the case with their North American counterparts.
“For Visa to go public and launch a campaign like this, which actually connects them directly with the consumer, is significant,” he said.
“Visa is positioning itself as the savior of consumers and saying, ‘Look, Walmart is complaining about our fee but here is what we’re trying to do for you,'” he added. (It’s) the battle of (who is) being the protector of the grocery shopper.”
Walmart vowed in June to stop accepting Visa at all of its more than 400 Canadian stores if Visa doesn’t lower its credit card fee, which it charges to all of its retail customers. The retail giant said it pays more than $100 million in fees annually for customers to use the various brands of credit cards, and that Visa’s fees are too high.
Walmart started off by banning Visa cards at its stores in Thunder Bay in July, then extended the ban to Manitoba on Oct. 24. It hasn’t said yet how soon it will extend the ban to other cities and provinces.
Hindman said Visa ran a similar ad in Thunder Bay after Walmart banned its cards in its stores there. The offer there was a $25 credit for every grocery purchase of $75 or more.
Walmart claims it is pushing for lower credit-card fees as part of its ongoing effort to reduce costs and to provide products to Canadians at the lowest possible prices. And Roberton said that remains the company’s primary focus.
“We work very hard to ensure our customers save money… and we will continue to do that.”
Visa, which is Canada’s largest credit card firm, has said it offered Walmart one of the lowest rates for any merchant in the country, but the retailer wants more. It said if it gives in, Walmart’s fees would be lower than those charged to other grocers and many of its other retail customers.
Charlebois said that’s the crux of the issue for Visa Canada, and the main reason it’s refusing to cave in to Walmart’s demands. If it does, other retailers will demand a reduction in their fees, as well.
“I think Visa may actually see this as a significant threat which could impact their entire business model, not just their business with Walmart,” he said.
But because Walmart is one of the world’s biggest retail chains, losing its business is going to hurt, he added.
“For Visa to respond (like this) likely means they’ve already seen a dent in their sales.”
Updated on Thursday, November 3, 2016 8:07 AM CDT: Typo fixed.
Updated on Thursday, November 3, 2016 9:49 AM CDT: updates info re: enrolling Visa card