he world's largest retailer, Wal-Mart Stores, Inc., announced it will no longer accept MasterCard-branded signature-based debit cards for payment, beginning Feb. 1, 2004. Wal-Mart is the first retailer following the April 2003 class action settlements between Visa and MasterCard and millions of other merchants to choose to accept one signature-based debit card brand over the other.

"The fees charged by MasterCard for its signature debit are simply too high, which led us to eliminate this payment option rather than pass these costs on to our customers," Mike Cook, Wal-Mart's Vice President and Assistant Treasurer said in a statement.

Wal-Mart has negotiated a deal with Visa where the discount retailer will be charged lower fees for Visa signature debit transactions than it was charged previously. Wal-Mart will still accept Visa- and MasterCard-branded PIN-based debit cards, which are processed through PIN networks such as Interlink, STAR, ACCEL, NYCE and AFFN; and Visa and MasterCard credit cards.

In a statement prepared for the Wall Street Journal, MasterCard complained that Wal-Mart is "putting its hand into its customers' wallets and telling them which form of payment they must use."

Wal-Mart said that MasterCard signature debit transactions account for less than 1% of its total transactions, the Wall Street Journal reported. Wal-Mart posted $244.5 billion in sales in 2002.

Wal-Mart's decision is a result of its and other retailers' settlements with the two credit card associations. Rather than go to trial in a class action antitrust lawsuit, Visa and MasterCard agreed to pay retailers nearly $3 billion, lower their debit card transaction fees by a third and eliminate their "honor all cards" policies.

The retailers filed the lawsuit against Visa and MasterCard in 1996 and were seeking up to $39 billion in damages. They claimed that as part of an "honor all cards" policy, Visa and MasterCard violated antitrust laws by forcing merchants to accept offline debit cards, which require a signature and are most costly to process, rather than less expensive online debit cards, which require a PIN. Visa and MasterCard argued that the policy was in the best interest of consumers.