Reports: Kroger Considers Cutting Ties with Visa After Dropping Service at a 21-Location Banner
CINCINATTI, OH - Kroger could be calling it kaput with one of the world’s largest credit-card companies, according to a Bloomberg report. Last month, the retailer announced that it would stop accepting Visa cards at its California Foods Co. Supermarkets’ 21 stores and five fuel centers. In total, the retailer reportedly pays approximately $90 billion in swipe fees each year.
“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,” Christopher Hjelm, Kroger’s Executive Vice President and Chief Information Officer, told Bloomberg, noting that when the amount paid to a service provider, even Visa, “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.”
Hjelm added: “If we have to expand that beyond Foods Co., we're prepared to take that step.”
In a statement reported on by MarketWatch, Foods Co. said it would no longer accept Visa cards beginning August 14 in order “to save on the high costs associated with the credit card company’s interchange rates and network fees.” And the financial news source suggested that the “battle over credit-card fees may only get worse.”
While a Kroger-wide ban on Visa cards is seemingly unthinkable, the Foods Co. move could result in a victory for retailers attempting to gain leverage in negotiations over credit fees. MarketWatch quoted CompareCards Chief Industry Analyst Matt Schulz, noting that “every retailer is going to be watching this really carefully.”
“It’s a gamble for Kroger,” said Schulz. “The average consumer doesn’t know anything about swipe fees. All they would know is that their favorite grocery store no longer accepts their favorite credit card.”
Visa commented that the credit provider is committed to working with Kroger in perpetuity.
“Our goal is to protect the interests of our cardholders to ensure they can use their Visa credit cards wherever they shop,” said Amanda Pires, Vice President of Communication for Visa, in a statement to the Wall Street Journal. “Visa remains committed to working with Kroger to reach a reasonable solution.”
For more on the situation as it develops, keep reading AndNowUKnow.
