The largest U.S. supermarket chain will ban Visa credit cards

Supermarket chain Kroger is considering expanding a ban on Visa credit cards, which it will soon stop accepting at Foods Co. stores in California. 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 no longer will accept Visa credit cards starting Aug. 14, according to USA Today.

“It’s pretty clear we need to move down this path, and if we have to expand that beyond Foods Co., we’re prepared to take that step,” Kroger spokesman Chris Hjelm said to Bloomberg. When the amount retailers pay in card fees “gets out of alignment, as we believe it is now, we don’t believe we have a choice but to use whatever mechanism possible to get it back in alignment.”

The decision was made to save on fees Kroger, the nation’s largest grocer, must pay Visa to process credit-card purchases. But the action could be far-reaching. Cincinnati-based Kroger is considering expanding the ban to more of its stores if it doesn’t reach a deal with Visa on fees at Foods Co. stores, the company’s chief information officer Chris Hjelm says.

„We are going to continue to work with Visa to get where we think is good for our customers, good for Kroger and works for Visa,” he said. If that means a ban at additional stores, „that’s what we will have to do,” he said.

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

Retailers typically are charged more by credit-card companies to process credit-card payments than debit cards. Kroger has been in negotiations with Visa and other companies to make credit-card sales less burdensome, Hjelm says.

„Cash, check and debit cards are much lower cost … and we believe we have got to get credit to a much more competitive place than it is today,” he said.

Foods Co. will still accept all debit cards, including Visa debit cards, as well as MasterCard, American Express and Discover credit cards.

The move will save customers from higher prices, Foods Co. President Bryan Kaltenbach said in a statement.

“We realize this will be a change for some customers,” he said. “But we believe this change will benefit all our customers by allowing our Foods Co. stores to continue to offer the things our customers value most, including our low prices, fresh produce and services.”

Visa is „disappointed at Kroger’s decision,” the credit company said in a statement. „Visa remains committed to working with Kroger to reach a reasonable solution.”