Kroger Fires a Warning Shot at Visa

Some California stores will no longer take Visa credit cards

CINCINNATI -- Foods Co, a Kroger subsidiary, will no longer accept Visa credit cards at 21 supermarkets and five fuel centers in California as of Aug. 14. The move to block Visa credit cards will affect six stores in the San Francisco Bay Area, four locations in the Sacramento Valley and seven in the Central Valley, in addition to the five fuel centers. Foods Co supermarkets will continue to accept Visa debit cards.

Kroger made it clear the move is a response to Visa’s interchange fees. “Our customers consistently tell us that one of the most important factors in choosing Foods Co as their supermarket of choice is our low prices,” said Bryan Kaltenbach, president of Foods Co, one of Kroger's "price-impact warehouse" food stores. “At Foods Co, we are committed to saving our customers money. Today’s decision will help Foods Co continue to deliver great value to our customers with low prices, fresh products and friendly service.”

U.S. retailers collectively pay $90 billion in swipe fees every year, according to Bloomberg. Cincinnati-based Kroger Co. operates 2,800 retail food stores under a variety of banners nationwide.

“We realize this will be a change for some customers,” said Kaltenbach. “But 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, more than payment type.”

Visa, meanwhile, is looking for a way to return its credit cards to Foods Co stores. “Visa is disappointed at Kroger’s decision to stop accepting Visa credit cards at its Foods Co stores. When consumer choice is limited, nobody wins. Our goal is to protect the interests of our cardholders to ensure they can use their Visa credit cards wherever they shop. Visa remains committed to working with Kroger to reach a reasonable solution,” a Visa spokesperson said.

This move by Kroger follows a decision earlier this year from the U.S. Supreme Court, which ruled to allow American Express to contractually stop merchants from offering promotions or discounts on rival cards or other methods of payment.

Photo courtesy of DeclanTM. 

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