Wal-Mart to Restrict Debit Card Purchases

Wal-Mart Stores Inc. said Wednesday that it would stop accepting MasterCard for certain debit-card transactions, the first major retailer to make such a move after a seven-year battle over fees.

Wal-Mart, the world’s biggest company, said it no longer would accept MasterCard for debit-card transactions that require a signature, as of Feb. 1.

The move was seen as a blow to MasterCard, which is struggling with a market share one-fourth the size of Visa’s in the signature-based debit area. Not only will MasterCard lose the business of Wal-Mart but it also could suffer further if other large retailers follow suit, analysts said.

“This is bad for the MasterCard brand image, unquestionably,” said David Robertson, publisher of the Nilson Report, an industry newsletter.

Wal-Mart typically accounts for about 4% to 5% of MasterCard’s signature-based debit transactions, Robertson estimated. He said MasterCard would earn about $110 million in 2003 from all such transactions.

Robertson said some customers would suffer from the Wal-Mart move because purchases that require a signature allow customers to rack up points or miles on rewards programs but those verified by a personal identification number do not.

Wal-Mart said it would continue accepting MasterCard credit cards.