Consumer Payment Card News

Debit Fight

As big merchants like Wal-Mart try to drive “off-line” or “signature-based” debit card use out of their stores, small businesses and consumers are beginning to balk at the notion of giving up a payment option. Major retailers insist that using your VISA or MasterCard-branded debit card like a credit card is slower, less safe, and cost merchants much more than “on-line” PIN debit, cash or checks. They say this produces a “hidden tax” that drives up prices on all products. Last week, a summary judgment hearing was held in federal court in New York in regard to a merchant class action, debit card, antitrust lawsuit against VISA and MasterCard.
Attorneys for the card associations told the judge the retailers’ claims are legally and factually deficient, and do not merit being presented to a jury. Attorneys for the merchants argued they have tons of evidence showing that VISA and MasterCard conspired to stifle the growth of PIN debit in favor of the more lucrative signature or “off-line” debit. It appears that the trial scheduled for April 28th will stay on track. Meanwhile, the Small Business Survival Committee, which represents 70,000 business nationwide, released a statement saying that small businesses will be harmed if merchants prevail in shaking up the current payment system. The SBSC says that card companies help smaller merchants compete with larger retailers and it is important for small merchants that consumers have as many options to pay as possible to encourage sales, convenience and to guarantee payment. The SBC says antitrust cases should be about what’s best for consumers and competition, not big companies. Allowing consumers the freedom to choose their preferred method of payment has been very good for all businesses, says the group. The statement concludes saying that this is not a system in need of remedy. In a recent online poll taken by, only 36% of consumers believe merchants should have the right to require you to use a PIN when making purchases with your VISA or MasterCard debit card.

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