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Kroger Stops Accepting Visa Credit Cards at Another Banner

Kroger Stops Accepting Visa Credit Cards at Another Banner
Citing excessive interchange and network fees, Kroger's Foods Co. and Smith's banners are no longer accepting Visa credit cards for payments

Starting April 3, Smith's Food & Drug will stop accepting Visa credit cards for payment, making it the second Kroger Co. banner to do so.

Kroger is ceasing acceptance of Visa credit cards due to the excessive interchange and network fees that Visa and its issuing banks charge retailers, which are driving up food prices for shoppers. According to Kroger, the fees are higher than those of any other credit cards accepted by Smith's and "exceed grocery store margins in the highly competitive food retail industry."

"Visa has been misusing its position and charging retailers excessive fees for a long time," said Mike Schlotman, Kroger's EVP and CFO. "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."

Kroger stopped accepting Visa credit cards at its Foods Co. Supermarkets in California last August. While no other Kroger banners are affected by this move, the Cincinnati-based grocer is continuing to explore options to reduce the cost of accepting credit cards so as to keep prices low for customers.

Smith's stores will continue to accept all other forms of payment, including major credit cards such as Mastercard, Discover and American Express; cash and checks; electronic benefit transfer cards from SNAP and WIC programs; and MasterCard and Visa debit cards both with and without PIN and health savings account cards.

"Grocery is a competitive business, and our ability to keep prices low for our customers depends on controlling costs," said 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."

Retail Industry Leaders Association (RILA) SVP of Government Affairs Austen Jensen issued the following statement in response to today’s announcement about the banned Visa credit cards in 250 Smith’s Food and Drug Stores:  

“RILA firmly supports Kroger’s decision to challenge the anti-competitive actions of VISA which continue to drive up the cost of accepting credit cards in the U.S. market. Technology has made credit card transactions faster and cheaper to process — yet the fees Visa imposes on these transactions paradoxically grow higher every year. If the second-largest supermarket chain in the country does not have the market power to drive down the cost of accepting credit card payments, imagine the impact on hundreds of thousands of small merchants that have no choice but to accept these exorbitant swipe fees in order to operate their businesses.  

Added Jensen: “Today’s action by Kroger reinforces the need for regulators and Congress to address the anti-competitive forces present in the payments market which drive up costs for American merchants and their customers.”

The Kroger Co. operates a seamless digital shopping experience and 2,800 retail food stores under a variety of banner names nationwide. The Cincinnati-based company is No. 2 on Progressive Grocer's 2018 Super 50 list of the top grocers in the United States. It was also named PG's 2018 Retailer of the Year.

About the Author

Randy Hofbauer

Randy Hofbauer is the former digital and technology editor of Progressive Grocer. He has more than a decade of experience as a content strategist, researcher and marketer, almost all of it covering CPG retailing. His insights and work have been cited in a number of media outlets, including The New York Times, the Associated Press and the Chicago Tribune, and he was named a finalist in the Software & Information Industry Association's 2018 Emerging Leader Awards. Follow him on Twitter or connect with him on LinkedIn.

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