Grocery company Kroger has banned Visa credit cards at two of its store brands in seven states in an effort to save on fees the credit card company charges to process their card payments. According to Kroger, what started as an initial ban at its Food Co stores in August has now expanded to 250 Smith’s Food & Drug Store locations as well.
Smith’s is one division of the Cincinnati-based Kroger, with 142 supermarkets and 108 fuel centers throughout Arizona, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming. Starting April 3, none of these stores—in the listed states—will accept Visa credit cards.
Kroger is the largest grocery company in the United States. The supermarket chain now operates 2,800 supermarkets in 35 states. You should note that the company’s catalog contains a gamut of regional subsidiaries. This includes Kroger stores, of course, but also Fry’s, Ralphs, Fred Meyer, Harris Teeter, and King Soopers, as well as Smith Food & Drug and Food Co, obviously.
It should also be noted that the vast majority of Kroger stores will continue to accept Visa credit cards. But those stores where Visa Credit Cards are banned will continue to accept Visa-branded debit cards.
Kroger’s Chief Financial Officer, Mike Schlotman, explains, “Visa has been misusing its position and charging retailers excessive fees for a long time. They conceal from customers what Visa and its bank 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 in mind, Schlotman attests, “We’re not going to stand for these high fees [and] are prepared to take additional steps to reduce the cost of accepting credit cards in order to keep prices low for customers.”
Apparently, Kroger has been trying to negotiate with Visa over the fee structure for several months, but they have not made any progress.
Of course, Visa asserts they offer “significant value” to retailers who use their credit network; and they argue they have offered several solutions to the associated Kroger brands and will continue to look for a solution.