Home Depot is following in Walmart’s footsteps in suing the global networks looking to make a point, if not money, out of what they contend to be issues with EMV. As reported in the Atlanta Journal Constitution:
In its lawsuit, Home Depot accused Visa and MasterCard of trying to block the use of PINs and pushing merchants toward accepting less-secure transactions that earn higher fees.
I think the “higher fee” comment is interesting. For the so-called regulated financial institutions that operate under the fee caps assigned to interchange, the difference between signature (dual message) and PIN (single message) transactions are very similar. An interesting Fed report bears this out. Regulated financial institutions issue the vast majority of cards.
The lawsuit further states:
The companies are pushing technology that “is defective and subject to fraud and have colluded with each other and with the banks that issue debit and credit cards to do so,” Home Depot said in its lawsuit.
“As a result of their conduct, United States consumers experience the highest rates of payment card fraud in the world, and United States businesses are subject to the highest payment card related fees in the world,” the lawsuit said. Home Depot said the card transaction fees are the “most onerous bank fees” it pays, amounting to almost $750 million last year.
Home Depot’s approach is a little different than Walmart’s in that it is suing both of the global networks, and it is apparently casting a broader net. They are incorporating their objections to not just the “chip and choice” approach over the “chip and PIN” route that most other countries have employed, but the overall expense of the EMV migration and the cost of processing in general.
I don’t think anyone would suggest that the EMV migration was smooth, however dragging important partner to court is an interesting approach. Operating a payments platform is not easy. Let us remember the lessons of the now defunct CurrentC.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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