Wal-Mart to stop taking some MasterCard debit cards

Wal-Mart Stores Inc. said it would no longer accept MasterCard signature debit cards after Feb. 1, 2004, because of the high fees.

The move is a result of the settlement of the merchants' lawsuit earlier this year in which Visa and MasterCard agreed to pay $3 million. Visa and MasterCard also agreed to stop requiring retailers that accept their credit cards to also accept debit cards and reduce debit-card fees for the rest of this year.

Retailers must pay a fee to MasterCard or Visa when a customer uses a debit card. Fees are higher when consumers sign for debit-card purchases than when they enter a personal identification number, or PIN.

"As a result of the merchants' lawsuit settlement, MasterCard can no longer require acceptance of its signature debit card as a condition of accepting its credit card," said Mike Cook, Wal-Mart's vice president and assistant treasurer, in a statement. "The fees charged by MasterCard for its signature debit are simply too high, which led us to eliminate this payment option rather than pass these costs on to our customers."

The company said most customers who use the MasterCard signature debit card would still be able to use the card through a PIN-based network. The company will continue to accept MasterCard credit cards.

In a prepared statement, MasterCard said Wal-Mart's decision takes the choice about how to pay for goods and services away from consumers and puts it in the hands of big retailers. " "With this decision, Wal-Mart is putting its hand into its customers' wallets, and telling them which form of payment they must use." The company said,. "Wal-Mart has been a valued customer and we respect their need to run their business as they see fit. We regret that we haven't been able to reach an agreement with them, but we must manage the MasterCard system in a way that balances the needs of all participants in the system - the financial institutions that issue cards, merchants, and consumers."

With more than 12,000 employees in St. Louis, Bentonville, Ark.-based Wal-Mart Stores Inc. (NYSE: WMT) is the fifth-largest employer in the region. In the last fiscal year the company earned $6.3 billion on revenue of $191.3 billion.

MasterCard International is a global payments company. MasterCard's Global Technology Center in O'Fallon, Mo., is the company's primary facility for processing MasterCard transactions around the world.