Supermarket firm Kroger has expanded its ban on accepting Visa credit cards, stating on Friday (March 1) that its Smith’s Food and Drug unit will stop offering that payment option beginning April 3.
The move follows 2018 bans on the payment giant’s cards at Kroger Foods stores located in the state of California.
Then, as now, the company said its decisions have been tied to the fees Visa levies on transactions. Kroger has labeled the fees as excessive. The company operates 130 Smith’s stores, and all told, as Reuters reported, roughly 142 supermarket and 108 fuel locations spanning seven states will no longer accept Visa cards.
The report quoted an unnamed Visa spokeswoman as saying, “It is unfair and disappointing that Kroger is putting shoppers in the middle of a business dispute.” The spokeswoman told the newswire that Visa offered solutions to allow its cardholders to use those cards at Foods Co and Smith’s “without Kroger-imposed restrictions.”
Smith’s will continue to accept all other forms of payment, Kroger said, and though it said that no other Kroger stores are affected by the Friday announcement, the firm will continue “to explore options to reduce the cost of accepting credit cards.”
As specific to Visa, Kroger said in a statement that the fees that Visa and issuing banks charge retailers “drive up food prices for all customers” and said that those fees “exceed grocery store margins in the highly competitive food retail industry.”
As has been reported, fees for both Visa and Mastercard transactions are expected to increase again next month.
PYMNTS’ Karen Webster noted in this space late last year that the battle between merchants and card firms over interchange fees stretches back over years. As she wrote back then, someone has to foot the bill for technology’s march and the move to digital payments, marked by a relatively safe way of doing business.
“Consumers don’t, so merchants must — and the biggest of those merchants pay very little, despite the protections consumers are afforded if things go amiss,” Webster wrote. “For every story that talks about merchants touting merchant-branded schemes to reduce interchange, there are thousands that just want to get the sale before someone else does.”
Turning back to Friday’s announcement, Kroger said that Smith’s is offering double rewards points for fuel purchases through May 21, and “additional savings” in groceries and fuel are available for “qualifying customers.”
Kroger, for its part, has debuted its own payment option as of last month. Kroger Pay can be linked to any major credit or debit card. The firm has launched the Kroger Rewards debit card, which links payments to rewards, such as the ones noted above. A nationwide expansion is slated for later in the year.
Date: March 7, 2019