Walmart is suing Visa for its allowance of signature verification of chip-based debit cards.
Walmart, on Tuesday, May 10, 2016, filed a lawsuit against Visa, concerning Visa’s protocol for chip debit cards.
According to a report from USA Today, Walmart is suing Visa for allowing customers to validate chip-enabled debit card transactions using a signature instead of a PIN. In the lawsuit, which was filed in the New York Supreme Court, Walmart stated that Visa requires the chain to accept signatures to validate chip debit cards, which Walmart says are a less secure payment method than PIN-based payments.
In addition to being a less secure form of payment, Walmart stated that signature verification for transactions costs more to conduct over Visa’s network. USA Today reported that Walmart’s payment terminals automatically prompt customers to enter a PIN when they use a chip debit card, but customers have the option to override it and enter a signature instead.
When customers choose to use a signature rather than a PIN Walmart is required to route payments through Visa’s network rather than through a competitor that may be a less costly option. Debit card transactions already account for more than 70% of the dollars spent on credit and debit card transactions at Walmart, according to USA Today, and the company is arguing that Visa is driving that cost even higher.