The Kroger Co.’s Salt Lake City-based Smith’s Food & Drug Stores division will become the retailer’s second banner to stop accepting Visa credit cards as a form of payment starting next month.
The move by Cincinnati-based Kroger leverages its considerable clout as the nation’s largest pure play grocery retailer and demonstrates its increasing frustration of the “excessive interchange and network fees” Visa and its issuing banks charge retailers and which, in turn, drive up food prices for all customers.
Smith’s Visa card ban begins April 3, after which time it will continue to accept all other forms of payment, and follows the lead of its Foods Co. stores in California, which stopped accepting Visa credit cards in August 2018. Kroger said none of its other banners are affected by its latest announcement and pledged to continue exploring “options to reduce the cost of accepting credit cards in order to keep prices low for customers.”
Kroger officials said the swipe fees Visa charges “are higher than any other credit card brand” it accepts and is thus the primary motivation behind its decision to discontinue accepting Visa credit cards in its Smith’s division, which employs more than 20,000 associates and includes 55 stores in Utah; 45 stores in Nevada; 23 stores in New Mexico; seven stores in Wyoming; and four stores each in Idaho, Montana and northern Arizona.
Declaring in a statement that “Visa’s excessive fees and unfairness cannot continue to go unchecked,” Mike Schlotman, Kroger’s EVP and CFO, said, “Visa has been misusing its position and charging retailers excessive fees for a long time. They conceal from customers what Visa and its banks charge retailers to accept Visa credit cards. That’s why, starting April 3, Smith’s will accept all forms of payment except Visa credit cards."
Noting that “grocery is a competitive business and our ability to keep prices low for our customers depends on controlling costs,” Smith’s President Kenny Kimball said the division’s stores will offer double rewards points toward fuel purchases and other promotional offers “to help our customers through this transition” and maximize their savings.
Smith’s will offer double rewards points on fuel purchases through May 21.
The Kroger Co. operates 2,800 retail food stores under a variety of banner names around the nation.