It is a poorly kept secret, or widely held belief throughout the merchant service industry that the big card brands push signature-based transactions over PIN-based ones at merchant locations to generate the higher interchange fees that signature transactions carry. The only ones who do not know the secret are the small merchants. Well the big retailer, Best Buy may have changed that for all merchants, they are boycotting Visa.
Best Buy Inc. has staged a boycott of Visa’s fee structure by refusing the acceptance of Visa contactless payment cards. According to Greensheet, “Analysts say Best Buy's decision is evidence of growing merchant discontentment over card acceptance rules.” Best Buy will continue to accept contactless cards from other brands and mag stripe Visa cards.
In a statement responding to the matter, Visa said: "While we're disappointed Best Buy will no longer offer its customers the convenience and speed of Visa payWave (contactless technology), it's important for cardholders to know they can continue to use their payWave card with a traditional swipe when shopping at Best Buy and millions of other merchant locations worldwide. Visa values its long-standing relationship with Best Buy, and we look forward to working with the retailer to grow our mutual businesses."
Industry insiders have long argued that card company policies that appear to encourage signature transactions are detrimental security and increase the chances for data theft and fraud. PIN transactions are far superior in protecting consumer data, but the revenue generated for the card companies is greatly reduced. The relatively high fraud rates associated with signature transactions are supposed to be offset by the higher interchange fees attached to signature-based card purchases. Of course those higher rates are paid by the merchants to the card companies.
Even if, as some say the boycott is strictly symbolic, it is likely to be the start of something big. As merchants are becoming more aware they growing more vocal in their dissatisfaction over payments industry interchange practices. According to the Greensheet, "It definitely ties into the legislation and things that are happening on Capitol Hill," said payments industry attorney Paul Rianda, referring to the ongoing push by merchant advocacy groups for federal legislation reforming interchange laws. "A lot of groups are unsatisfied with the whole concept of how they're accepting credit cards. This is another way they're showing their displeasure about having to accept a more costly form of payment."
Things may change for a change
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