If you’re buying groceries from a Kroger anytime soon, you may want to hit up the ATM: Kroger is no longer taking Visa cards.
But don’t worry! Kroger hasn’t banned Visa cards nationwide…yet. Right now only 21 Foods Co. supermarkets (branches owned by Kroger) in California—along with five gas stations—will no longer take Visa cards starting on August 14. Just as Kroger says hello to a new self-scan technology, they have decided to say goodbye to another popular customer amenity.
What’s behind this decision?
Due to expensive “swipe” fees, Kroger has decided to no longer allow these type of credit card purchases. Kroger actually pays around $90 billion in credit card processing fees every year, according to a Bloomberg report. Foods Co. stated that it is “to save on the high costs associated with credit card company’s interchange rates and network fees.” According to Market Watch, retailers will typically have to pay 2 or 3 percent of the purchase price.
Will it affect every Kroger out there?
At the moment, only the 21 stores and 5 gas stations connected to Foods Co. in California will be affected. However, if fee charges don’t improve for Kroger, this may expand on a national level.
Will it actually be resolved?
Visa has spoken out saying that they will work hard to negotiate with Kroger, since it’s in their best interest to please the customer.
“When consumer choice is limited, nobody wins,” said Visa in a statement. “Our goal is to protect the interests of our cardholders to ensure they can use their Visa credit cards wherever they shop. Visa remains committed to working with Kroger to reach a reasonable solution.”
So will Kroger be cash only?
Not quite! Kroger actually has a partnership with Mastercard due to its’ 1-2-3 REWARDS co-brand credit card program, issued by U.S. Bancorp. This loyalty program allows shoppers to earn valuable points with every purchase, which can be used for food and other merchandise at Kroger grocery stores. They even receive exclusive fuel discounts and personalized shopping coupons.
“We are always looking for partnerships that support our business strategy of creating value for customers by lowering costs throughout the business,” said Gary Millerchip, CEO of Kroger Personal Finance, in a press release.
At the moment, Kroger’s partnership with Visa just isn’t working out. But by the sounds of it, both companies want to work out an agreement for the benefit of satisfying customers. Only time will tell how this debacle will play out.