March 1, 2019
Kroger has announced that its Smith's Food & Drug Stores division will no longer accept Visa credit card payments at the chain's 142 stores and 108 gas stations starting April 3, due to what the company has called excessive transaction fees.
Kroger said that excessive interchange and network fees are driving up food prices at the chain and that Visa's fees are the highest of any credit card accepted at Smith's. They said the fees exceed profit margins at the chain.
"Visa has been misusing its position and charging retailers excessive fees for a long time," Mike Schlotman, chief financial officer and executive vice president at Kroger, said in the announcement. "They conceal from customers what Visa and its banks charge retailers to accept Visa credit cards."
Schlotman said that Visa's "excessive fees and unfairness cannot go unchecked."
Smith's will continue to accept debit cards from Visa and Mastercard, and credit cards from Mastercard, Discover American Express, as well as cash, checks, WIC and SNAP government benefit transfer cards and health savings account cards. The chain will offer customers double reward points on fuel purchases through May 21 to help them through the transition.
Smith's operates mainly in Utah, Nevada and New Mexico, but also has stores in Wyoming, Idaho, Montana and Arizona. It is now the second Kroger brand to stop accepting Visa since last year. In August 2018, the company's Food's Co. Supermarket stopped accepting Visa credit cards. Kroger said the decision doesn't currently impact its other brands, but said it continues to explore options for reducing the cost of accepting cards.
A spokesperson for Visa said that the company provides a tremendous value for merchants, including access to additional customers, enhanced digital security, easy checkout and innovative technology and said there is a cost for adding those services.
"It is unfair and disappointing that Kroger is putting shoppers in the middle of a business dispute," the spokesperson said. "We have put forward a number of solutions to allow our cardholders to continue using their preferred Visa credit cards at Food's Co. and Smith's without Kroger imposed restrictions and we continue to work towards a resolution."
The spokesperson confirmed that Visa debit and prepaid cards continue to be accepted at all Kroger stores, including Food's Co. and Smith's.
Kroger operates more than 2,800 retail groceries under a variety of brands, including Kroger, Ralphs, Dillons, King Soopers, Fry's and other brands.
Topics: Card Brands, POS, Retail
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