Best Buy Co. Inc. has made good on threats it made in July to drop acceptance of Visa Inc.'s contactless cards because of the fee structure surrounding the cards, according to an industry analyst.
The retailer has stopped accepting Visa contactless cards at its more than 1,000 retail locations because Visa prohibits the use of PIN authorization with contactless transactions, forcing retailers to accept more costly signature-based transactions, Nick Holland, a senior analyst at the Boston consulting firm Aite Group LLC, said Thursday.
Best Buy began accepting Visa contactless cards in 2007. In July of last year, the retailer issued a statement expressing its unhappiness with Visa's contactless signature policy and the high costs associated with it. Best Buy said then that it was evaluating the continued acceptance of Visa contactless cards.
Holland said Best Buy's actions are unlikely to have a significant impact. "This is a one-off battle between Visa and Best Buy," he said. "I don't see it spreading much given the low contactless adoption. I don't think it's the start of a revolution."
Visa's devotion to signature-based contactless transactions, however, poses an obstacle to adoption of cards that comply with the EMV Integrated Circuit Card Specifications, Holland said. "Visa's insistence on signature is fundamentally what is holding back EMV," which requires consumers to enter a PIN at the point of sale to complete transactions, he said. "The interchange that they get [from signature transactions] far outstrips the fraud reduction that EMV provides."
Visa and Best Buy did not return calls Thursday.