Security & Fraud

Visa Claims Walmart Acting 'In Bad Faith'

In the legal battle heating up over identification – and consumer choice – used to authorize EMV debit payments at Walmart stores, Visa said Wednesday (June 29) that the world’s largest retailer “secretly configured” payment terminals to accept only personal identification numbers (PINs) when chip cards were presented by consumers.

Visa claims that such hotwiring betrays the terms of a contract agreed upon by the two companies, and in that fact Visa stated that its EMV debit cardholders must be giving the choice of authorization, whether by PIN or signature. 

The latest legal joust comes after a suit was filed by Walmart in May, in which the retailer contended that the PINs showed a better security profile than signatures. 

Legal verbiage from Wednesday’s Visa counterclaim, as filed in New York state court, contends in part that "Indeed, at the time of (the contract's) execution, Walmart had already hatched a plan to eliminate the signature option at its physical locations shortly after the effective date.” But, according to Visa, it was never told by Walmart that signatures remained an option. As a result, Visa said, it had received complaints from card users that they could no longer use debit cards to complete transactions if they did not have PINs – and perhaps not surprisingly, debit transactions at the Walmart stores had waned. 

As noted by The Wall Street Journal Wednesday, Visa gets some measure of control over transactions made with signatures, as merchants have some discretion in payments used with PIN transactions – chiefly that they can route such transactions through non-Visa networks.

Separately, Visa said in a statement Thursday that “Earlier today, Visa filed counterclaims to Walmart’s lawsuit filed on May 10, 2016. Visa believes the lawsuit at its core is a commercial dispute between two companies. Instead of complying with the terms of the commercial agreement that the two companies negotiated and agreed to in 2015, Walmart is attempting to avoid its obligation to provide a signature option for their customers when paying with a Visa debit card.

"We believe that Walmart is acting in bad faith and never intended to honor its obligation under the agreement” the statement concluded.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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