Kroger is considering a ban on one of its most common forms of payment

  • Kroger will ban Visa cards as a form of payment at its Foods Co. stores on August 14.
  • A Kroger spokesperson said the ban could expand to all of Kroger’s thousands of stores.
  • The ban is due to Visa‘s fees, which the grocer says are “out of alignment.”

Visa is everywhere you want to be – except, potentially, the nation’s largest grocery-store chain in terms of sales.

Kroger subsidiary Foods Co. will enact a ban on paying with Visa credit cards starting on August 14. The ban is currently slated to affect 21 stores and five gas stations in California starting on August 14. Debit cards will not be affected by the ban, even if they are managed by Visa.

In a statement from Foods Co. to Business Insider, the brand says the fees Visa charges retailers are the “highest of any credit card brand.”

“The savings will be passed along to Foods Co. customers in the form of low everyday prices on the items shoppers purchase most,” the statement continues.

But Kroger has signalled that the ban could expand from Foods Co., a no-frills discount grocery store with a limited number of locations, to Kroger’s main brand, which has 2,778 stores nationwide.

Kroger’s chief information officer, Chris Hjelm, told Bloomberg that the fees Visa charges are “out of alignment.”

“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,” the spokesperson told Bloomberg. “We don’t believe we have a choice but to use whatever mechanism possible to get it back in alignment.”

Visa is the most popular card payment organisation in the US, with about 53% of the credit card market. According to the Wall Street Journal, citing the Nilson Report, retailers paid $US43.4 billion in swipe fees to Visa and Mastercard in 2017. These fees are charged whenever a customer uses a credit card at that retailer.

A Visa spokesperson told Business Insiderl that it is “disappointed” with the decision by Foods Co.

“When consumer choice is limited, nobody wins. 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,” the spokesperson said.

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