Some Kroger-owned Stores Banning Visa Credit Cards
Supermarket chain Kroger Co. (NYSE: KR) has announced that it is banning Visa credit cards at its Foods Co. stores in California starting August 14. The affected California stores are 21 Foods Co. supermarkets and five gas stations in San Francisco, Sacramento, Fresno and Bakersfield. The stores will still accept all debit cards, including Visa debit cards, as well as MasterCard, American Express and Discover credit cards.
Cincinnati-based Kroger says it is making the move to save money on Visa’s interchange rates and network fees, which it claims are some of the highest in the industry. Credit card companies generally charge more to process credit card payments than debit cards. Those rates, ranging between 1 and 3 percent, can eat deeply into the profit margin of a low-margin business like grocery stores.
Foods Co. President Bryan Kaltenbach said in a statement that declining to take Visa credit cards would save customers from higher prices. He stated, “We believe this change will benefit all our customers by allowing our Foods Co. stores to continue to offer the things our customers value most, including our low prices, fresh produce and services.” Kroger is not the only company grappling with these types of decisions. Walmart made the decision last week to end its card agreement with Synchrony Financial due to a disagreement over terms.
Kroger’s chief information officer Chris Hjelm said that the company has been in negotiations with Visa, as well as other companies, to make credit-card sales less burdensome to thee business. He said, “We are going to continue to work with Visa to get where we think is good for our customers, good for Kroger and works for Visa.” Visa said in a statement that it was “disappointed at Kroger’s decision,” but that it “remains committed to working with Kroger to reach a reasonable solution.”