Walmart may have found a way to avoid swipe fees

Walmart may have just done its customers a favor — one that consumers may not have even thought about. With swipe fees costing retailers and their customers over $170 billion annually, Walmart reportedly wants to continue this effort — a move the company began in 2023 when it announced it would end its contract with Capital One.

Starting in 2025, Walmart customers should see the first fruits of this labor when the company begins offering customers the ability to pay directly and instantly from their bank accounts when making online purchases.

Previously, transactions resembled digital checks and took about three days to clear through The Automated Clearing House. Earlier this year, Walmart began offering bank payments through Walmart Pay in hopes of breaking this vicious cycle.

Now that they feel confident that everything is going according to plan, customers who choose to pay by bank transfer will have their purchase reflected in their account balance immediately and Walmart will receive the funds promptly.

Another benefit of instant bank payment for the consumer is that they no longer have to keep a constant pending transaction on their debit card. According to Jamie Henry, vice president of new payment methods at Walmart, customers with low balances are at risk of their bank charging overdraft or insufficient funds fees.

“When the transaction is processed as a real-time payment, customers can see immediately that the payment has been received. I see that it has hit my account and can plan my budget accordingly,” Henry said. “It’s not like I have this phantom payment that’s not due for a few days.”

Could others follow this example?

Walmart is not the only one fighting this battle. All over the world, frustration has grown over the fees they pay to banks and networks like Visa and Mastercard for credit card processing.

During the 2023 Congressional session, the Credit Card Competition Act (CCCA) was reintroduced to increase competition among credit card processors. To comply with the measure, major banks would have to accept cards from at least one network other than Visa and Mastercard.

Retailers supporting the bill include Walmart, Amazon, Best Buy, Kroger, Target and Shopify – all on the list of nearly 2,000 retailers, platforms and small businesses urging lawmakers to pass the bill. They claim that credit card processing costs are imposed on consumers by driving up the cost of doing business on top of the price shoppers pay at checkout.

On the other hand, however, there are politicians who believe that this hurts small businesses and compromises security. Others, however, believe that it is corporate greed, not interchange fees, that is driving up costs for consumers.

“Big retailers want Congress to pass the CCCA so they can make even more money,” says Colorado State Representative Sheila Lieder.

“Amazon, Walmart, Home Depot, Kroger and Costco … will rake in an additional $1.2 billion from this bill, while those savings are unlikely to be passed on to consumers. We know they won’t use their windfall to reduce costs at the checkout because we’ve been down this road before.”

The politicians behind the initiative say they are seeing “growing support,” but with election season approaching and the possibility of a change in the House and Senate majorities, it may take some time for the CCCA to get out of the mess it is in.