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Kroger to accept Visa credit cards at all stores, reversing ban

The grocery giant said it would accept Visa cards at all its stores, after a ban at two store chains spurred by high swipe fees

Summary

Kroger has reversed a ban of Visa credit cards at two of its store chains that was spurred by high interchange fees.

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Kroger has reversed a ban of Visa credit cards at two of its store chains that was spurred by high interchange fees.

The supermarket giant announced on March 1 its Smith Food & Drug Stores division would stop accepting Visa credit cards beginning April 3. The ban included 142 stores and 108 gas stations located in Utah, Nevada, New Mexico, Wyoming, Idaho, Montana and Arizona.

In August 2018, Kroger-owned Foods Co. Supermarkets said it would no longer take Visa credit cards. That ban covered 21 stores and five fueling centers in central and northern California.

According to news reports, Visa credit cards will now be accepted at both chains.

Shoppers were 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 planned 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.”

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 2018 it would cut its interchange fees to their lowest levels in nearly 20 years.

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