Walmart vs. Visa: Customers would shop less frequently if retail giant pulls cards from stores

Canadians side with Walmart in fee dispute, but expect retailer to line own pockets, not pass on savings

July 7, 2016 – As Walmart prepares to stop accepting Visa cards in certain Canadian stores beginning on July 18, a new public opinion poll from the Angus Reid Institute indicates that, while the retailer may be winning the public opinion ballot question over the credit provider, it may create a gaping self-inflicted wound if it follows through with its plan.

This national public opinion poll finds most Canadians (59%) side with Walmart in its war of words with Visa (41%) – but at a potentially significant cost. Half (46%) of Walmart shoppers who have used a Visa card to make a purchase at the store in the past year say they are less likely to shop at the store going forward if it stops accepting Visa.

Further, two-thirds of Canadians (65%) and almost as many regular Walmart shoppers (64%) believe that whatever savings are made as a result of any cut in Visa’s fees will mostly end up lining Walmart’s pockets, rather than being passed on to its customers.

In short, if this were an election campaign, Walmart would be winning the political air war but not getting the votes out on the ground at the ballot box. In fact, if push came to shove, a good chunk of Walmart’s supporters would simply vote with their feet and go elsewhere.

Key Findings:

When forced to choose between the two companies, more Canadians side with Walmart (59%) than side with Visa (41%)

Roughly half (46%) of those who have used a Visa card at Walmart in the last 12 months say they’re likely to shop there less frequently if the retailer follows through on its plan to stop accepting Visa

Two-in-three Canadians (65%) think the savings from any cuts Visa makes to its fees are likely to go to Walmart’s bottom line. Only one-in-ten (14%) think the savings would be passed onto customers in the form of lower prices

Almost everyone in Canada has shopped at Walmart in the past year …

Walmart and Visa have sued each other a number of times in recent years over security and payment disputes. The latest front in this ongoing battle has the potential to affect a huge number of Canadians.

Not only are most Canadians (80%) aware of the ongoing fight, an astonishing nine-in-ten (93%) have shopped at Walmart in the past year. Two-in-five (43%) have done so regularly, 36 per cent a few times, and 14 per cent just once or twice. Only 7 per cent of Canadians indicate that they have not shopped at Walmart at all in the last 12 months.

… And many of them used Visa cards …

Four-in-ten (43%) of those who have shopped at Walmart in the past year have used a Visa card to make a purchase. This includes a total of one-quarter (23%) of all Walmart shoppers who use Visa “every time” (13%) or “most times” (10%) they shop there. A further 20 per cent of total shoppers use their Visa cards less frequently, as seen in the following graph:

Most are aware of the Walmart – Visa dispute

As previously mentioned, eight-in-ten Canadians (80%) are aware of the showdown between Walmart and Visa, which is set to come to a head on July 18, when the retail giant plans to stop accepting Visa cards at three locations in Thunder Bay, Ontario.

One-in-seven Canadians (14%) are following these developments closely in the news and discussing them with friends and family, and another one-third (34%) have seen some media coverage and had the odd discussion with others. Another three-in-ten (32%) are keeping abreast of the matter by scanning the headlines.

Walmart wins the argument in most Canadians’ minds

The changes at Walmart’s Thunder Bay stores are expected to be the first in a series of moves designed to put pressure on Visa to reduce its merchant fees. Over time, if an agreement is not reached, more and more Walmart locations across Canada would stop accepting the cards.

Many smaller merchants – themselves frustrated with credit card fees – are cheering for Walmart in the stand-off, and this poll finds most of the Canadian public on the side of the retailers in this debate.

Almost six-in-ten Canadians (59%) side with Walmart and its position that Visa’s fees are too high, while the rest (41%) take Visa’s position that their fees are reasonable.

Those who are following the dispute closely are more divided in their allegiances (45% support Visa, 55% support Walmart) than those who are just scanning the headlines or haven’t been following at all (38% Visa; 62% Walmart).

Likewise, two-thirds (65%) of those who shopped at Walmart regularly in the last year support the retailer, while the only group that expresses majority support for Visa is the small cohort that never shops at Walmart:

Half of Visa-using Walmart shoppers plan to shop there less frequently

While Walmart wins the battle for Canadians’ sympathies, it may prove to be a Pyrrhic victory for the retailer on two fronts – its bottom line and its perceived motivations for fighting.

If the retail giant makes good on its threat to pull Visa cards from all of its Canadian outlets, it may affect the company’s bottom line significantly. Half (46%) of those shoppers who have used a Visa card to make a purchase at Walmart in the past year indicate they’re likely to shop there less frequently going forward.

As seen in the first graph of this release, it is frequent Visa users who are most likely to change their shopping behavior:

Putting this finding another way, Walmart stands to lose as many as one-fifth (20%) of its Canadian customers as a result of the decision to cut Visa out of its stores.

Majority of Canadians believe Walmart’s motivation is to line its own pockets

But the potential pitfalls of Walmart’s strategy do not stop there. Most Canadians (65%) doubt that the average Walmart customer will see the benefits of any reduction in Visa fees the company is able to negotiate, saying instead that savings will go mostly to Walmart.

Even among regular Walmart shoppers, some 63 per cent believe savings will mostly end up in Walmart’s pocket as opposed to being passed on to customers through lower prices, as seen in the graph that follows:

The Angus Reid Institute (ARI) was founded in October 2014 by pollster and sociologist, Dr. Angus Reid. ARI is a national, not-for-profit, non-partisan public opinion research organization established to advance education by commissioning, conducting and disseminating to the public accessible and impartial statistical data, research and policy analysis on economics, political science, philanthropy, public administration, domestic and international affairs and other socio-economic issues of importance to Canada and its world.

Click here for the full report including tables and methodology

Click here for comprehensive data tables

Click here for the questionnaire used in this survey

MEDIA CONTACTS:

Toronto: John Wright, Senior Fellow: 416.919.2101 john.wright@angusreid.org

Vancouver: Ian Holliday, Research Associate: 604.442.3312 ian.holliday@angusreid.org

Image Credit – Dominick “Dome”

Related Posts

Share this article: LinkedIn