Kroger-owned chain to stop accepting Visa credit cards

California-based Foods Co. Supermarkets bans Visa credit due to high swipe fees

Brady Porche
Managing Editor
Personal finance journalist with an eye for industry news

 

A California subsidiary of Kroger will stop accepting Visa credit cards next month, in a dispute over swipe fees.

Foods Co. Supermarkets said it would no longer take Visa credit cards beginning Aug. 14. The ban will cover 21 stores and five fueling centers in central and northern California. Shoppers will still be 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.

Foods Co. said in a statement Visa charges some of the highest fees of any credit card brand, and that the store’s customers would save money as a result of its decision. Additionally, a Kroger spokesman said 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.  

See related: Card surcharge ban laws take another blow in California court

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 in March it would cut its interchange fees to their lowest levels in nearly 20 years.

 


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Updated: 10-22-2018