Kroger to Ban Visa Credit Cards at Select Grocery Stores
Yesterday, Kroger announced a subsidiary of its grocery store chain will no longer accept Visa credit cards. As of August 14, 2018, nearly half of all Foods Co. stores and fuel centers will stop accepting Visa cards due to a dispute concerning the high interchange fees.
The 21 locations affected by the ban are all based in central and northern California.
“Visa’s rates and fees are among the highest of any credit card brand,” says Foods Co. in an email statement. “The savings will be passed along to Foods Co. customers in the form of low everyday prices on the items shoppers purchase most.”
Customers will still be able to use Visa debit cards at these locations. They may also use Mastercard, Discover and American Express credit cards.
Who will suffer the most from the ban? Customers who are inconvenienced? Visa that will lose some revenue? Or Foods Co. that will cut some expenses by not having to pay a higher interchange fee with Visa, but may lose some customers?
Will customers simply use a different payment method in the store, or will they go to another store to do their shopping?
Costco, another grocery chain, only accepts Visa credit cards in their stores. The company switched from American Express to Visa in 2016, and immediately saw a positive revenue increase after the switch. This is largely because of a lower interchange fee that Costco negotiated with Visa compared to American Express.