Kroger California unit plans to ban Visa credit cards over fees

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Kroger Co., the largest U.S. supermarket chain, said a California subsidiary will stop accepting Visa credit cards beginning next month in a dispute over swipe fees.

“Visa’s rates and fees are among the highest of any credit card brand,” Foods Co. Supermarkets said Monday in an emailed statement. “The savings will be passed along to Foods Co. customers in the form of low everyday prices.”

The ban will go into effect Aug. 14 and affect about two dozen Foods Co. stores and fuel centers in Central and Northern California, including in San Francisco and Sacramento, according to the statement. Customers will still be able to use Visa Inc.’s debit cards, as well as cards from Mastercard Inc., Discover Financial Services and American Express Co.

The spat is the latest battle over the $90 billion that U.S. merchants pay each year in swipe fees. Major retailers have long looked for ways to cut down on such charges, including by lobbying lawmakers to lower the rates and through technology upgrades that avoid Visa and Mastercard entirely. A burgeoning group of financial-technology startups are also attempting to offer cheaper alternatives for merchants.

Kroger sued payment-card companies over fees in 2016 in the aftermath of the U.S. switch to chip-and-PIN technology. Foods Co.’s decision is similar to a ban Walmart Inc. implemented two years ago in some of its Canadian stores when the retailer clashed with Visa over card fees. That dispute ended when the two companies reached an agreement about seven months later.

Bloomberg News
Retailers Interchange fees Visa Kroger