The nation’s largest grocery chain and its most widely held credit card are butting heads over transaction fees. And, as of August 14, shoppers in one of the chain’s subsidiaries will no longer be able to use their Visa cards at checkout.
Foods Co., in California, will stop accepting Visa cards this month at its 21 stores and five fuel centers if the two companies can’t work out their differences. And the company’s chief information officer tells Bloomberg that could spread to a national ban if necessary.
“If we have to expand that beyond Foods Co., we’re prepared to take that step,” said Chris Hjelm. “When the amount retailers pay in card 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.”
At issue is the “swipe” fee Kroger must pay when customers use their cards at stores. Kroger argues it’s presently too high, cutting into the chain’s bottom line.
Visa, in a statement, said it negotiations will continue.
“Visa is disappointed at Kroger’s decision to stop accepting Visa credit cards at its Foods Co. stores,” the company said. “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 dispute (if it spreads nationwide) is likely to cause notable consumer inconvenience. It also comes at an awkward time for Kroger. The company is dealing with a recall of salads and wraps at its stores and battling a fake online coupon, which could fool some customers.