Kroger vs. Visa

by Bloomberg and Denver Post

Kroger is considering expanding a ban on Visa credit cards imposed by one of its subsidiaries, in the latest signal that retailers are preparing a fresh battle over the $90 billion they pay in swipe fees every year.

Merchants have long looked for ways to cut such charges, including by lobbying lawmakers for lower rates and through technology upgrades that avoid traditional card payments entirely. Shares of payment companies including Visa, American Express and Mastercard dropped on Monday.

Kroger, the largest U.S. supermarket chain and parent company of King Soopers and City Market in the Colorado market, said its Foods Co. Supermarkets unit in California will stop accepting Visa cards at 21 stores and five fuel centers next month. Kroger spokesman Chris Hjelm said in an interview that the parent company might follow the lead.

“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,” Hjelm said. 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.”

But Colorado residents who shop at King Soopers and City Market won’t have to fret about using their Visa to buy bananas and kitty litter — those stores will continue to accept the iconic card.

“As we redefine the grocery customer experience, we are always looking for partnerships that create customer value,” King Soopers spokesman Adam Williamson said. “At this time, our King Soopers and City Market stores in the Colorado market will continue to accept Visa credit.”