Best Buy Kicks Visa Contactless Out Of The Building
Written by Evan SchumanWithin a few months of Best Buy threatening Visa that it will halt accepting its contactless card unless Visa changed its fees, the $35 billion 1,023-store chain made good on its threats and became Visa contactless-less.
The controversy involves Visa forcing chains to accept more expensive signature—as opposed to the more retail-friendly PIN—authorization. Best Buy is still accepting Visa magstripe cards plus other brands’ contactless offerings.
The Visa contactless issue is, technically, not a different price for contactless per se. The problem involves a Visa prohibition against allowing a PIN to be used with a Visa contactless debit card and it’s the lack of a PIN option that pushes those transactions into a much higher interchange rate. Mastercard’s contactless cards have no such restriction.
Best Buy started accepting Visa contactless back in August 2007 and it was in all of their stores by April 2008, but by July 2009, it started pushing back against new Visa rules forcing higher signature rates and Best Buy issued a statement July 16 that it “is constantly looking at ways to reduce the cost of check lane tender. As part of this exercise, we are evaluating the continued acceptance of Visa-issued contactless payment cards in our stores in light of recent price increases. However, at this time we have not completed our analysis.”
“After several discussions with Visa produced no agreeable changes,” the chain started removing its acceptance of Visa contactless cards in October, completing the cutoff in November, said one Best Buy executive involved in the decision. The cutoff happened store by store along with POS upgrades.
“Our decision was based on the costs associated with requiring contactless debit transactions be processed as signature debit,” the Best Buy executive said.
Word has been slow in getting out, with many Best Buy store-based associates unaware of the change—with several insisting in early January that it was still accepted—and even Visa is still proclaiming on its contactless Web site–as of Tuesday (Jan. 5)—that Best Buy is accepting the cards.
-Marc
January 6th, 2010 at 6:30 pm
Meh. None of my credit cards have pins. I always sign.
January 7th, 2010 at 3:11 pm
With market trends these days, everyone is moving towards contactless payment processing. However, key thing here to note is the proliferation of cellular phones and smart phones.
It won’t be long until we are all paying via our mobile payments account, and no longer carrying plastic. Just wave your phone in front of the reader, and it will be paid. Exciting things are in the works.
January 7th, 2010 at 6:25 pm
This article is very interesting. Of course, it brings up more questions than answers. Is Best Buy starting a trend? Will this impact Visa’s approach? What is Best Buy losing by turning off PayWave cards? What is Visa losing by not having contactless acceptance at Best Buy?Most importantly, I wonder what the long term effect will be. Will this move the needle either way?
January 8th, 2010 at 1:33 pm
Since these cards can be swiped, I think Visa has much more to lose in this battle than Best Buy.
June 3rd, 2011 at 2:35 pm
Amazing. You’d think Visa would have just dropped the fees for Bestbuy…or, rather, have given them some sort of marketing dollars to compensate. Also, why didnt BB reprogram the POS to prompt for PIN if contactless BIN range indicated it was a debit card?