Evan Schuman's StorefrontBacktalk

Within a few months of Best Buy threatening Visa that it will halt accepting its contactless card unless Visa changed its fees, the $35 billion 1,023-store chain made good on its threats and became Visa contactless-less.

The controversy involves Visa forcing chains to accept more expensive signature—as opposed to the more retail-friendly PIN—authorization. Best Buy is still accepting Visa magstripe cards plus other brands’ contactless offerings.

The Visa contactless issue is, technically, not a different price for contactless per se. The problem involves a Visa prohibition against allowing a PIN to be used with a Visa contactless debit card and it’s the lack of a PIN option that pushes those transactions into a much higher interchange rate. Mastercard’s contactless cards have no such restriction.

Best Buy started accepting Visa contactless back in August 2007 and it was in all of their stores by April 2008, but by July 2009, it started pushing back against new Visa rules forcing higher signature rates and Best Buy issued a statement July 16 that it “is constantly looking at ways to reduce the cost of check lane tender. As part of this exercise, we are evaluating the continued acceptance of Visa-issued contactless payment cards in our stores in light of recent price increases. However, at this time we have not completed our analysis.”

“After several discussions with Visa produced no agreeable changes,” the chain started removing its acceptance of Visa contactless cards in October, completing the cutoff in November, said one Best Buy executive involved in the decision. The cutoff happened store by store along with POS upgrades.

“Our decision was based on the costs associated with requiring contactless debit transactions be processed as signature debit,” the Best Buy executive said.

Word has been slow in getting out, with many Best Buy store-based associates unaware of the change—with several insisting in early January that it was still accepted—and even Visa is still proclaiming on its contactless Web site–as of Tuesday (Jan. 5)—that Best Buy is accepting the cards.