​Walmart says it intends to join the list of retailers in Canada that don't accept Visa cards, citing high fees for transactions. It's a move one retail analyst has said will cause "pain on all sides."

All credit cards charge fees to retailers, which generally are between one per cent and 2.5 per cent of the cost what's being sold. The fees vary depending on the type of card the customer is using — cash-back and premium cards generally have higher fees — and the type of retailer they're shopping at.

Walmart Canada quietly made the announcement on Saturday that it would gradually stop accepting Visa cards at all of its locations, citing "unacceptably high" fees.

But a statement from Visa said the credit card company offered "one of the lowest rates available to any merchant in the country."

Documents on Visa Canada's website show that for standard retail purchases made in-store, fees range from 1.42 to 2.08 per cent. Meanwhile, MasterCard's website shows that for standard purchases at independent retailers, its fees range from 1.44 to 2 per cent.

But MasterCard also offers lower rates to large retailers — as low as 1.26 per cent for those that have a minimum "net purchase volume" of $3 billion.

Representatives from Walmart Canada declined to provide the amount of total annual credit card sales. In a statement posted to its website the company said it pays "over $100 million in fees to accept credit cards each and every year."

Last month, Walmart reported worldwide total revenue for the first quarter of its 2016-17 fiscal year at $115.9 billion US.

Disadvantages on both sides

Doug Stephens, a Toronto-based retail analyst and strategist, noted that both sides will likely see disadvantages to this deal. "If you can't walk into a mass merchant and use a Visa card, that's going to seem very strange," Stephens said.

"You can't ignore the fact that Visa has a tremendous market share," he said. But he added, "If you do business with Walmart, and Walmart ceases to do business with you, you can't help but feel that."

Consumer finance industry newsletter Nilson Report says that Visa made up 56 per cent of credit card transactions globally in 2015, and Walmart Stores Inc., Walmart Canada's parent company, is widely reported to be the world's largest retailer.

"At the end of the day, when we strip everything out of the debate, we're dealing with the potential that six out of ten

customers will come into a Walmart store and be disappointed that they can't use their credit card," Stephens said. "Competition is extremely tough. This is not a good time to limit your consumer's ability to buy from you."

He said Walmart's analysts have likely crunched the numbers, and determined that without having to pay Visa's fees, it would stand to make more money than it loses.

While debit cards charge retailers only a couple of cents per transaction, regardless of the amount of the purchase, merchants get charged a percentage of what they sell to customers using credit cards.

Phasing out will start in Thunder Bay

Walmart's statement said the first stores to stop accepting Visa will be in Thunder Bay, Ont., starting July 18. After that, it will be rolled out Canada-wide in phases.

A representative from Walmart said the stores in that northern Ontario city have the infrastructure to easily make the change. He said Walmart started informing Thunder Bay customers of the change on Thursday.

Walmart has more than 400 locations in Canada, and more than 11,500 worldwide, according to the company's global website.

Walmart isn't the first store to stop accepting Visa — No Frills doesn't accept Visa or American Express, saying that they are too expensive for their business. And Costco only accepts MasterCard when it comes to credit card payments.

Walmart says it will continue to accept MasterCard, American Express and Discover cards.

A representative from Visa Canada said in a written statement that the company "regrets" Walmart's decision, and that it will have a "negative impact" on Walmart's shoppers.

Walmart Canada said the company is holding out hope that it will be able to "reach an agreement" with Visa for lower fees.

U.S. lawsuits

The two companies have sparred about similar issues south of the border, too.

Last month, Walmart Stores Inc. filed a lawsuit against Visa Inc. in a New York court, saying the payment operator was resisting the use of personal identification numbers (PINs) by U.S. customers making purchases on Visa debit cards.

Walmart and other U.S. retailers have pushed to allow customers to use PINs instead of old-school signatures in a bid to prevent counterfeit card fraud. However, banks and payment network operators recently adopted chip technology and prefer chip cards verified by signatures, seeing no need to invest further in more expensive PIN technology.

A wallet containing cash and a Visa card is shown in this 2011 file photo. Walmart is joining No Frills and Costco on the list of Canadian retailers who don't accept Visa cards. (Wilfredo Lee/Associated Press)

According to the lawsuit, Walmart says it pays Visa more for signature-based transactions rather than those made using PINs

And in March, Walmart had also sued Visa Inc. in an Arkansas court, where the company is headquartered, accusing Visa of excessively high swipe fees. The lawsuit came several months after the retail giant opted out of a $5.7 billion class-action settlement between merchants and Visa and MasterCard Inc, approved by a federal judge in Brooklyn, N.Y.

Walmart, Amazon.com Inc, and Target Corp were among those opting out of the monetary components of the settlement, in order to have the freedom to seek damages on their own.

"The anti-competitive conduct of Visa and the banks forced Walmart to raise retail prices paid by its customers and/or reduce retail services provided to its customers as a means of offsetting some of the artificially inflated interchange fees," Walmart said in court documents.

"As a result, Walmart's retail sales were below what they would have been otherwise."