Kroger, the US’s largest grocer, says it will reverse three month interchange fee ban on Visa credit cards. “As of today, Kroger now accepts Visa credit cards at all our family of stores, including Smith’s and Foods Co.,” announced Kristal Howard company spokeswoman for Kroger.
Kroger, which operates under several subsidiaries, started banning use of the Visa card in its small Foods Co. chain in California in August 2018. It expanded the ban in April to the larger Smith’s Food & Drug Store chain.
Smith’s ban on Visa spanned 142 supermarket and 108 fuel centre locations across seven states – Utah, Nevada, New Mexico, Wyoming, Idaho, Montana and Arizona.
Kroger had said it was banning Visa to save money on interchange fees and keep groceries low. In April, officials also said they would consider expanding the ban to additional stores.
During the ban, Smith’s stores and Foods Co. stores still accepted all debit cards, including Visa debit cards, as well as Mastercard, American Express and Discover credit cards.
CreditCards.com’s industry analyst Ted Rossman said he saw Kroger’s decision to reverse its ban on Visa credit cards as “a win for Visa and the entire card industry.”
“We don’t know the specific terms here, and maybe Kroger got a better deal, but my view is that card bans and surcharges are consumer-unfriendly and could actually hurt merchants,” Rossman said in a statement.
Kroger also said when announcing the bans that Visa’s interchange fees and network fees were the highest in the industry.
Rossman said that while retailers don’t like paying 2 or 3% in fees to companies, it’s “a lot better than losing sales.”
“Research shows that consumers are more likely to buy – and even to spend more – when using a card. Banning all cards, or certain types of cards, or charging more to use cards seems like a losing strategy that could push customers to competitors, especially in competitive, low-margin industries such as groceries.”
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