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Offbeat After Kroger strikes back at Visa, battle over credit-card fees that may only get worse

09:35  07 august  2018
09:35  07 august  2018 Source:   marketwatch.com

Kroger's California subsidiary to bar Visa credit cards amid fee dispute

  Kroger's California subsidiary to bar Visa credit cards amid fee dispute Kroger announced Monday that a California subsidiary will no longer accept Visa credit cards as of mid-August as the two companies clash over payment fees and rates. "Visa's rates and fees are among the highest of any credit card brand," Foods Co. said in an emailed statement Monday. "The savings will be passed along to Foods Co. customers in the form of low everyday prices on the items shoppers purchase most."The ban on Visa credit cards will take effect starting Aug. 14 and affect 21 Foods Co. stores and fuel centers in Central and North California.

If you have a Visa credit card , be careful next time you go to Kroger : It might get declined. And the same could start happening at more stores. Foods Co Supermarkets, part of the Kroger KR, +1.48% chain, recently said that it will stop accepting Visa V

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Kroger and Visa’s dispute may not make your groceries any cheaper. © Provided by Dow Jones & Company, Inc. Kroger and Visa’s dispute may not make your groceries any cheaper.

If you have a Visa credit card, be careful next time you go to Kroger: It might get declined. And the same could start happening at more stores.

Foods Co Supermarkets, part of the Kroger (KR) chain, recently said that it will stop accepting Visa(V) credit cards at 21 stores and 5 gas stations in California starting Aug. 14, because the store is unhappy about Visa’s interchange, or “swipe” fees.

Foods Co said it will no longer accept Visa “to save on the high costs associated with the credit card company’s interchange rates and network fees.” Credit card companies including Visa, Mastercard (MA) and Discover (DFS) charge merchants every time a customer buys a product using their cards.

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Kroger Co. is considering expanding a ban on Visa Inc. credit cards imposed by one of its subsidiaries, in the Kroger spokesman Chris Hjelm said in an interview that the parent company might follow the lead. Read more: Walmart, Visa Resume Lobbying Battle Over Credit - Card Rules.

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The fees vary, depending on the relationship between the retailer and the company, but it is typically about 2% to 3% of the purchase price. All those swipe fees can add up, especially for groceries that have relatively low profit margins, said Brendan Miller, a principal analyst at the research firm Forrester who covers payments.

Kroger has a partnership with Mastercard for its loyalty program, and produces co-branded Mastercards, said Kendrick Sands, a senior consumer finance analyst for the research firm Euromonitor. More Kroger customers could now be encouraged to use Mastercard, he said, or simply turn to debit cards when making purchases.

Will more retailers stop accepting certain cards?

It looks increasingly likely that retailers will feel emboldened by the debacle between Kroger and Visa, said Craig Shearman, the vide president for government affairs public relations at the National Retail Federation, a trade group.

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Fees and Drawbacks of the Kroger Credit Card . For an entire year after card approval, Kroger Mastercard holders can earn an additional 25¢ off each gallon of fuel the The certificates cannot be redeemed for cash- back and technically, your purchase amount must exceed the amount of rewards

Kroger said Friday it won’t accept Visa credit cards at a second subsidiary, as the nation’s largest grocery story chain escalates its squabble with the credit company over transaction fees . Cincinnati-based Kroger said it would stop accepting the cards at its Smith’s Food and Drug stores as of April 3

Shearman declined to speak specifically to Kroger’s decision, but he said retailers have little ability to negotiate with credit-card companies, who have “extreme market power” when it comes to how customers pay for purchases.

Credit-card companies like Visa set their fees based on factors including the size of the retailer and whether they’re accepting a card payment in person or online. Those fees “are presented on a take-it-or-leave-it basis,” Shearman said.

“I think retailers are definitely getting more frustrated,” he said. More customers are now paying with credit cards, meaning swipe fees are more of a hot-button issue and larger retailers could bring attention to that, he said. “That’s what gets the attention of the card companies,” he said.

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A Major Supermarket Chain Has Declared War on Visa. Here's What You Need to Know

  A Major Supermarket Chain Has Declared War on Visa. Here's What You Need to Know Kroger will stop accepting Visa cards at some of its locations later this month – the latest salvo in an escalating war between the nation’s biggest grocery store chain and the biggest credit card company. Kroger has said it will stop taking Visa credit cards at 21 of its Foods Co. supermarkets and five gas stations located throughout California starting August 14, USA Today reports.The ban on Visa comes in a battle between the supermarket chain and the credit card company over the “swipe” fees Kroger pays the company to allow credit card purchases.

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“ Visa is disappointed at Kroger ’s decision to stop accepting Visa credit cards at its Foods Co. stores,” the company said. It also comes at an awkward time for Kroger . The company is dealing with a recall of salads and wraps at its stores and battling a fake online coupon, which could fool some customers.

Is this good or bad for consumers?

Visa has indicated that it’s open to negotiation on the issue. “Visa is disappointed at Kroger’s decision to stop accepting Visa credit cards at its Foods Co. stores. When consumer choice is limited, nobody wins,” a Visa spokesperson said in a statement. “Visa remains committed to working with Kroger to reach a reasonable solution.”

“It’s a gamble for Kroger,” said Matt Schulz, the chief industry analyst at credit-card website CompareCards. “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.” Kroger, meanwhile, is likely hoping that Visa will lower its credit-card swipe fees for its stores.

He agrees with Shearman from NRF. “I think every retailer is going to be watching this really carefully,” he said.

The hope for consumers: Retailers will lower their prices if/when they save money on swipe fees, Schulz said. But unfortunately for shoppers, a George Mason University study last year found that retailers don’t typically lower prices when they reduce credit-card swipe fees.

3 times you shouldn't use your credit card .
Even though credit cards offer rewards and protection, sometimes it's better to go with debit or cash.That might be why debit card usage is declining in the U.S. Since 2013, the percentage of households that use debit cards has dropped from 74 percent to 58 percent in favor of alternative payment methods like credit cards and apps, according to a report from ValuePenguin. Almost a third more households pay with credit now compared to five years ago.

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