Kroger Grocery Unit [Foods Co subsidiary in CA] to Ban Visa Credit Cards

[MULTIZ321]

Kroger Grocery Unit to Ban Visa Credit Cards
By Brittany De Lea/ Financials/ FoxBusiness/ foxbusiness.com

"Foods Co., a unit of Kroger, the largest supermarket chain in the U.S., will no longer accept payment from customers using credit cards issued by Visa, the largest credit card company in the U.S.

The grocery store chain announced the policy change on Monday, saying it was due to Visa’s interchange rates, which merchants pay to banks whenever a customer uses a corresponding card at the store.

“Visa's rates and fees are among the highest of any credit card brand," Foods Co. said in a statement. "The savings will be passed along to Foods Co. customers in the form of low everyday prices on the items shoppers purchase most."

A spokesman for Kroger said the parent company was prepared to follow the lead of Foods Co. if the amount retailers paid to the bank remains “out of alignment Opens a New Window. ,” according to Bloomberg.

Foods Co. will stop accepting Visa credit cards – but not debit cards – as payment beginning on Aug. 14. The policy will affect 21 stores and five gas stations in California...."

Richard

 

[Sea Six]

Do they take American Express?

I wonder why the retailers don't just program in their system to add the charge from the credit card company. The user should pay for it.

 

[VacationForever]

It feels like April Fools day joke. It is even worse than Costco switching from AmEx to Visa. In the past, AmEx charged the highest merchant fees, then AmEx dropped the fees about a year ago to be more in line. Many people only have Visa and not AmEx because in the past it was AmEx that was less accepted by merchants. Now I have to get an AmEx for my husband as he only carries Visa. What a pain.

 

[lauramiddl]

It feels like April Fools day joke.

I felt the same was but went to google, and there it was. It's a thread that wouldn't start until middle of August, so who knows. I use my Alaska Airlines Visa to pay for groceries, so I'd have to shop elsewhere. I'm on my way to free Maui tickets!

 

[bluehende]

Do they take American Express?

I wonder why the retailers don't just program in their system to add the charge from the credit card company. The user should pay for it.

I know that is against their contracts. I know most give a discount for cash but cannot put a surcharge on for credit cards. Rest assumed the consumer does pay for it somehow.

 

[dougp26364]

No problem. I’ll just shop even less with Kroger.

 

[Sugarcubesea]

Cash is King and I use that as my tender...

 

[VacationForever]

Cash is King and I use that as my tender...

But then you are leaving money (credit card points) on the table. I converted my cash-only husband to pointsguy husband. Points help pay for our travel.

 

[bluehende]

Cash is King and I use that as my tender...

I am just the opposite. Rarely use cash except for small purchases.

 

[bogey21]

It will be suicide if Kroger drops Visa. I just pulled my cards out of my wallet and see that all my Credit and Debit Cards are processed through Visa. I'm sure many others are in the same boat. I suspect that Kroger is using Food Co as a test to see what will happen to their volume when they drop Visa. My guess is that they will quickly find out that it is a bad idea and drop the idea...

Yes, I know that Kroger is saying that they will only drop Visa Credit Cards and continue to accept Visa Debit Cards but will their customers understand the difference or will they believe that all cards with Visa stamped on them aren't being accepted and stop doing business with Kroger...

George

 

[bbodb1]

Did y'all notice this was just in California?

From the article:

...Foods Co. will stop accepting Visa credit cards – but not debit cards – as payment beginning on Aug. 14. The policy will affect 21 stores and five gas stations in California....

 

[dioxide45]

Did y'all notice this was just in California?

From the article:

Yeah, the headline is somewhat misleading. It is only the Food Co.unit which is very small, not the entire chain. Though they did also say this "A spokesman for Kroger said the parent company was prepared to follow the lead of Foods Co. if the amount retailers paid to the bank remains “out of alignment,” according to Bloomberg."

 

[vacationtime1]

Yeah, the headline is somewhat misleading. It is only the Food Co.unit which is very small, not the entire chain. Though they did also say this "A spokesman for Kroger said the parent company was prepared to follow the lead of Foods Co. if the amount retailers paid to the bank remains “out of alignment,” according to Bloomberg."

I think this "experiment" is really a negotiation between Kroger and VISA. Kroger hopes that there is no change in its receipts as a result of dropping VISA, a large change in VISA's receipts (i.e. down to zero), and a "realignment" of VISA fees as a result.

However, I tend to think George is right (post #10); Kroger's revenues will suffer and they will come crawling back to VISA.

The real fun will be when customers with full shopping carts, no cash, and only VISA cards have unloaded all of their groceries on the checkout belt.

 

[Passepartout]

Looks like a small 'trial balloon' to test both public and Visa's reaction. Testing the results in 21 stores and 5 gas stations will show Kroger what they could expect in a bigger rollout. Note that Visa branded debit cards are not included, and other than 'point miners', who puts groceries on a credit card anyway? I don't.

Kroger could make it interesting by throwing in some Kroger brand item or fuel points for paying with the approved method, but it remains to be seen what incentives they'll try. With Wal-Mart & Amazon nipping at their heels, Kroger won't give in without a fight.

Jim

 

[Ken555]

I know that is against their contracts. I know most give a discount for cash but cannot put a surcharge on for credit cards.

This limitation stopped in 2013 for many States due to a legal settlement.


Sent from my iPad using Tapatalk

 

[Ken555]

Note that Visa branded debit cards are not included, and other than 'point miners', who puts groceries on a credit card anyway? I don't.

I’ve been paying for groceries with a credit card for about 30 years. I don’t use a debit card for anything (it’s an ATM only card as far as I’m concerned). I don’t see any reason to use anything other than a credit card especially when some cards offer up to 6% back on supermarket purchases.


Sent from my iPad using Tapatalk

 

[Ken555]

In general, merchants (and, therefore, consumers) pay too much for the ability to process payments by credit card. I’ve been working on this lately with a few businesses and it’s objectively absurd how we have become accustomed to paying a considerable sum to banks for this feature. You may think a few % is nothing to worry about but as businesses continue to run on shrinking profit margins everything is considered. One of my clients has a very successful business and yet pays an amount equal to about half his profit on merchant fees. That’s simply excessive, especially when the systems have become quite efficient. As an aside, these fees are a reason why crypto currencies were adopted by some businesses, since the cost to process a payment is dramatically less as compared to credit cards.


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[pedro47]

The headlines is very misleading. Looks liked it is only in one state. The state is California. But a very large State, with a very large population, with a very large numbers of grocery shoppers.

 

[pedro47]

This report came from Fox Business Financial News.

 

[rickandcindy23]

I didn't see anything about the rest of the country, so just CA. But it could be coming for the rest of us. Our Kroger is King Soopers. In the mountains, it's City Market.

 

[MULTIZ321]

Kroger May Expand Visa Credit Card Ban to More Stores
By Mike Snider/ USA Today/ Money/ Business/ usatoday.com

"Giant supermarket chain Kroger will stop accepting Visa credit cards at its Food Co., stores in California and may expand the ban.

Foods Co., part of Kroger's California-based Food 4 Less Stores subsidiary, says 21 supermarkets and five gas stations in central and northern California will no longer accept Visa credit cards starting August 14.

The decision was made to save on the high costs associated with Visa's "interchange rates and network fees," Foods Co. said in a statement.

But the action could be more far-reaching. Cincinnati-based Kroger is considering expanding the ban to more of its stores, company spokesman Chris Hjelm told Bloomberg. “If we have to expand that beyond Foods Co., we’re prepared to take that step,” Hjelm told Bloomberg.

Retailers pay $90 billion in so-called swipe fees annually, according to Bloomberg, and Kroger is concerned that Visa's rates and fees are among the highest charged.

What Kroger is paying now is "out of alignment," Hjelm said. "We don’t believe we have a choice but to use whatever mechanism possible to get it back in alignment.”....

Richard

 

[Sea Six]

I use my credit card for everything I can, including utility bills. The rewards programs from the cards get me free stuff - hotel rooms, airline miles, even cash back. Some cards even extend my warranty period, or replace a purchase if it gets lost or stolen. You'd have to be crazy to use cash and not get all the free stuff.

 

[rickandcindy23]

They are cutting off their nose...

I know people who will switch to Safeway, and Kroger is already dealing with competition from Whole Foods, Sprouts, Walmart (they hate Walmart) and the Vitamin Cottage near us. Then of course there is Amazon, Sam's, and Costco. I spend literally only about $50 per month at Kroger, and it's always the big sale items.

 

[Brett]

I use my credit card for everything I can, including utility bills. The rewards programs from the cards get me free stuff - hotel rooms, airline miles, even cash back. Some cards even extend my warranty period, or replace a purchase if it gets lost or stolen. You'd have to be crazy to use cash and not get all the free stuff.

yep, credit cards hooked me on rewards and cash back

 

[dioxide45]

I’ve been paying for groceries with a credit card for about 30 years. I don’t use a debit card for anything (it’s an ATM only card as far as I’m concerned). I don’t see any reason to use anything other than a credit card especially when some cards offer up to 6% back on supermarket purchases.


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Thus is the real problem. Visa is charging the fees to cover the cash back and other rewards programs. That 6% has to come from somewhere. Nothing is really free, you may not pay it in interest but you pay it in a premium at the register. I asked a question a long time ago, how much more is everything costing us because of all of these rewards programs?