Kroger Announces That Visa Credit Cards Soon Won't Work At These Stores


 
 
03:56 03/04/2019

Kroger KR , one of the largest grocery chains, has decided that it will ban Visa credit cards at its Smith’s food and drug division, citing the increasing costs from premium cards.

The chain said it will stop accepting Visa credit cards beginning April 3rd, a move that will impact 142 Smith's Food & Drug supermarkets as well as 108 gas stations in seven states. The Smith's locations are in Utah, Nevada, New Mexico, Wyoming, Idaho, Montana and Arizona.

Customers will still be able to use their Visa debit cards, the company said in a statement.
It was last summer that Kroger had decided to ban Visa credit cards at its Foods Co. Supermarkets unit in California.

According to the company's Chief Financial Officer, Mike Schlotman, Kroger is responding to the growing popularity of premium cards, which come with higher swipe fees for merchants.
Schlotman also said that the company would not rule out continued expansion of the ban. 'No option is off the table.'

'Visa has been misusing its position and charging retailers excessive fees for a long time,' said Schlotman. 'They conceal from customers what Visa and its banks charge retailers to accept Visa credit cards. At Smith's, Visa's credit card fees are higher than any other credit card brand that we accept. Visa's excessive fees and unfairness cannot continue to go unchecked. That's why, starting April 3, Smith's will accept all forms of payment except Visa credit cards.'

“Premium-rewards cards carry significantly higher fees, and they entice the customer to use those,” Schlotman said. “When you’re in a business that has a margin of 2 percent or less, a 1 percent higher fee has a meaningful effect to the bottom line.”

Matt Schulz, chief industry analyst at CompareCards.com, which is owned by mortgage lender LendingTree, said last August to USA TODAy, '(It is) basically a power move to try and force Visa to knock those fees down. The battle over swipe fees has been brewing for some time and this move by Kroger shows that it is about to escalate.'

'Retailers argue that the (swipe fees) raise the prices of their items because the cost gets passed on to consumers or the retailers have to eat the cost themselves,' said Kimberly Palmer, credit card expert at personal finance site NerdWallet.com.

'Grocery is a competitive business and our ability to keep prices low for our customers depends on controlling costs,' stated Kenny Kimball, president of Smith's. 'To help our customers through this transition, we have great offers inside our Smith's stores today, including double rewards points towards fuel purchases and other promotions to save on groceries.'

“There will certainly be some consumers who don’t like the decision,” Schlotman added.

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