Kroger extends ban of Visa credit cards
The grocery giant said Smith's Food & Drug Stores will no longer accept Visa due to high swipe fees
Personal finance journalist with an eye for industry news
Kroger has added another one of its store chains to its ban of Visa credit cards.
The supermarket giant announced on March 1 its Smith Food & Drug Stores division would stop accepting Visa credit cards beginning April 3. The ban includes 142 stores and 108 gas stations located in Utah, Nevada, New Mexico, Wyoming, Idaho, Montana and Arizona.
Last August, Kroger-owned Foods Co. Supermarkets said it would no longer take Visa credit cards. That ban covers 21 stores and five fueling centers in central and northern California.
Shoppers are still able to use Visa debit cards, as well as cards from other networks such as Mastercard, Discover and American Express.
Retailers pay card networks an interchange fee – also called a “swipe fee” – of about 2 or 3 percent of the purchase price each time a consumer uses a credit card. Experts say the costs of the swipe fees typically get passed on to the consumer. Visa and Mastercard are reportedly planning to raise swipe fees in April.
"Visa has been misusing its position and charging retailers excessive fees for a long time," Kroger vice president Mike Schlotman said in a news release. "They conceal from customers what Visa and its banks charge retailers to accept Visa cards. At Smith's, Visa's credit card fees are higher than any other credit card brand that we accept."
A Kroger spokesman said in August the ban could be expanded to the parent company's stores. Kroger operates 2,782 grocery stores in 35 states under nearly two dozen brands, according to its website.
Retailers have fought the card networks in court over swipe fees in recent years. In 2014, Wal-Mart filed a lawsuit against Visa, alleging the latter used its dominant market position to jack up swipe fees. The lawsuit said retailers paid $350 million in interchange and network fees from 2004 to 2012.
American Express has also faced pushback from retailers and corporate partners over its high swipe fees, which have kept it at a lower acceptance rate in the U.S. than chief rivals Visa and Mastercard. But Amex announced March 2018 it would cut its interchange fees to their lowest levels in nearly 20 years.
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