Kroger Escalates War with Visa

The Kroger Co. announced that its Smith’s Food & Drug Stores division will be the company’s second banner to stop accepting Visa credit cards as a form of payment, beginning April 3, 2019. Smith’s will continue to accept all other forms of payment.

The excessive interchange and network fees that Visa and its issuing banks charge retailers drive up food prices for all customers. Visa’s fees are the highest of any credit cards accepted in Smith’s and exceed grocery store margins in the highly competitive food retail industry, according to a press release from Kroger.

Smith’s employs more than 20,000 associates and operates 55 stores in Utah; 45 stores in Nevada; 23 stores in New Mexico; 7 stores in Wyoming; and 4 stores each in Idaho, Montana and Northern Arizona.

“Visa has been misusing its position and charging retailers excessive fees for a long time,” said Mike Schlotman, Kroger’s executive vice president and CFO. “They conceal from customers what Visa and its banks charge retailers to accept their credit cards. At Smith’s, Visa’s credit card fees are higher than any other credit card brand that we accept. Their excessive fees and unfairness cannot continue to go unchecked. That’s why, starting April 3, Smith’s will accept all forms of payment except Visa credit cards.”

Smith’s is the second Kroger banner to decline acceptance of Visa credit cards. It follows Foods Co. Supermarkets in California, which stopped accepting the credit cards in August 2018.

Related Article: Kroger Bans Visa Card Payments in California

While no other Kroger banners are presently affected by this announcement, Kroger continues to explore options to reduce the cost of accepting credit cards in order to keep prices low for customers.

Smith’s stores will continue to accept all other forms of payment, including major credit cards such as Mastercard, Discover, and American Express; cash and checks; electronic benefit transfer cards from SNAP and WIC programs; and MasterCard and Visa debit cards both with and without PIN and health savings account cards.

“Grocery is a competitive business and our ability to keep prices low for our customers depends on controlling costs,” said Kenny Kimball, president of Smith’s. “To help our customers through this transition, we have great offers inside our Smith’s stores today, including double rewards points towards fuel purchases and other promotions to save on groceries.”