Foods Co. – a California subsidiary of the Kroger Co. – will stop accepting Visa credit-card payment at its 21 stores across the nation from August 14. Additionally, the five gas stations of Foods Co. in central and northern California will also stop accepting Visa credit card payments.
The Kroger Spokesman Chris Hjelm told Bloomberg on July 30, that the company may expand the ban. “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,” he said.
However, the payments from debit cards from Visa Inc. and credit cards from other companies will still be accepted in the affected stores and fuel centers.
The ban is the result of a dispute between Kroger and Visa over the swipe fee—which is paid to Visa by Kroger to handle customer’s credit card transactions
Interchange fees are charged to merchants by card networks like Visa for processing a debit or credit card payment. The average interchange rate for a credit card payment is around 1.81 percent, while the typical rate for debit cards is 0.3 percent.
Th interchange fees make up the majority of the cost involved in accepting a card payment. They have been a lasting point of tension between merchants and card companies.
Merchants shelled out $43.4 billion in Visa and Mastercard credit card interchange fees in 2017, an increase of 68 percent from $25.9 billion in 2012.
Prior to Kroger, Walmart Inc. dropped a credit-card deal with Synchrony Financial in July, after the two firms failed to reach an agreement. Amazon.com Inc. is also foraying into financial services—a move expected to save retailers $250 million a year in swipe fees.