US mega merchant Kroger Co. is considering expanding a ban on Visa credit cards imposed by one of its subsidiaries, in the latest signal that retailers are preparing a fresh battle over the $90 billion they pay in card interchange fees every year.
Shares of payment companies including Visa, American Express and Mastercard dropped on the news. Merchants have long looked for ways to cut such interchange fees, including by lobbying lawmakers for lower rates and through technology upgrades that avoid traditional card payments entirely.
The largest US supermarket chain, Kroger said its Foods Co. Supermarkets unit in California will stop accepting Visa cards at 21 stores and five fuel centres next month. Kroger spokesman Chris Hjelm said that the parent company might follow the lead.
“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,” Hjelm said. When the amount retailers pay in card interchange 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.”
Kroger’s announcement followed Walmart’s decision last week to abandon Synchrony Financial after the two couldn’t agree to economic terms. And Amazon.com’s foray into financial services has also been seen as a way the retailer could save $250 million.
Still, the world’s largest payments networks continue to benefit from a global shift away from cash to electronic payments. Visa shares have climbed 20% this year as Mastercard rose 31%.
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