08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

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storewanderer
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08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by storewanderer » July 30th, 2018, 7:29 pm

It appears as of 08/14/2018, Kroger's 21 FoodsCo locations and 5 fuel centers will stop accepting Visa Credit Cards. However, they will continue to accept American Express, Discover, and MasterCard Credit Cards. They will also still accept Visa Debit Cards.

This is due to Kroger Co. claiming something about Visa's fees being too high.

Last I checked, Discover and American Express charge higher fees than Visa. Maybe Kroger has some kind of special deal that makes it different for them. Or perhaps they are just going after Visa since it is far and away the highest used card type so the volume of transactions is making it so the fees are too high.

Kroger claims this will enable them to cut prices at the FoodsCo Stores. I wonder how that will work when many people will just use a different credit card to pay instead...

I think this is a great move. There is nothing better than limiting the customer's payment choices. Visa is far and away the most widely used credit card type. Visa Credit Cards declining at checkout and then the time it will take the $20+ Northern California high wage cashiers to explain why the cards are declining to the customers will surely save a ton of money and work wonders in promoting "fast checkout" as well. Especially when you are fighting against some financial group that you think is charging too high of fees. What better stores to impose this on, than the ones in Northern California? And who better to "punish" than your Visa Credit Card using customers in Northern California? I suppose it is the customer's fault that so many banks issue Visa Credit Cards rather than competing card types.

This will also work well in Kroger's tie up with "Chase Pay" which is tied to Chase Credit Cards (almost all of which are VISA Credit Cards). Rather than going with the NFC/Apple Pay/Android Pay Grocery Industry Standard that supports various card types, not just Visa and not just those issues by a specific bank.

So again a great move to catch your customers in the middle of a business dispute with an unrelated party.

I suppose making the FoodsCo locations the sacrificial lamb for this is a strategic move of some sort. I suppose we can all expand on the strategy but I will just not even bother. They wouldn't dare do this in a market where they have a serious presence and lots of competition like, say, Denver or Phoenix. It would be a heck of a windfall to Albertsons if they did, though.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by klkla » July 30th, 2018, 7:42 pm

Kroger seems to be picking some interesting fights lately. Just a couple weeks ago they were trying to delay payments to farmers and now this. I imagine this is some sort of test at FoodsCo because it is such a small operation within the Kroger family.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by storewanderer » July 30th, 2018, 8:42 pm

klkla wrote:
July 30th, 2018, 7:42 pm
Kroger seems to be picking some interesting fights lately. Just a couple weeks ago they were trying to delay payments to farmers and now this. I imagine this is some sort of test at FoodsCo because it is such a small operation within the Kroger family.
I do not really understand what they are doing. All I know is I don't like it.

Stop taking all credit cards and have truly lower prices (like WinCo) and provide a visible benefit to the customer for taking away credit card acceptance.

Years ago in one of Kroger's analyst conference calls, one of the investment firm representatives was implying that Kroger's "gas points" program was too generous and was asking the CEO (pretty sure it was Dillon) about if they would dial the program down or similar. The CEO's response was something along the lines of "once you give the customer something, it is pretty hard to take it away."

I think the current management would be very well served to remember that quote. "Once you give the customer something, it is pretty hard to take it away."

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by jamcool » July 31st, 2018, 6:53 am

I thought that Discover had lower processing fees, it seems that those businesses that won’t take Amex will happily take Discover.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by babs » July 31st, 2018, 8:47 am

jamcool wrote:
July 31st, 2018, 6:53 am
I thought that Discover had lower processing fees, it seems that those businesses that won’t take Amex will happily take Discover.
There are far fewer people using Discover than Amex.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by babs » July 31st, 2018, 8:50 am

storewanderer wrote:
July 30th, 2018, 8:42 pm
klkla wrote:
July 30th, 2018, 7:42 pm
Kroger seems to be picking some interesting fights lately. Just a couple weeks ago they were trying to delay payments to farmers and now this. I imagine this is some sort of test at FoodsCo because it is such a small operation within the Kroger family.
I do not really understand what they are doing. All I know is I don't like it.

Stop taking all credit cards and have truly lower prices (like WinCo) and provide a visible benefit to the customer for taking away credit card acceptance.

Years ago in one of Kroger's analyst conference calls, one of the investment firm representatives was implying that Kroger's "gas points" program was too generous and was asking the CEO (pretty sure it was Dillon) about if they would dial the program down or similar. The CEO's response was something along the lines of "once you give the customer something, it is pretty hard to take it away."

I think the current management would be very well served to remember that quote. "Once you give the customer something, it is pretty hard to take it away."
If customer truly knew and understood how much those free airline points, cashback offers, and free hotel nights are really costing merchants, they would be shocked. The problem is that any savings by not taking reward based credit cards is highly unlikely to be passed back to the consumer. And that's the real issue.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by storewanderer » July 31st, 2018, 11:13 pm

babs wrote:
July 31st, 2018, 8:50 am
storewanderer wrote:
July 30th, 2018, 8:42 pm
klkla wrote:
July 30th, 2018, 7:42 pm
Kroger seems to be picking some interesting fights lately. Just a couple weeks ago they were trying to delay payments to farmers and now this. I imagine this is some sort of test at FoodsCo because it is such a small operation within the Kroger family.
I do not really understand what they are doing. All I know is I don't like it.

Stop taking all credit cards and have truly lower prices (like WinCo) and provide a visible benefit to the customer for taking away credit card acceptance.

Years ago in one of Kroger's analyst conference calls, one of the investment firm representatives was implying that Kroger's "gas points" program was too generous and was asking the CEO (pretty sure it was Dillon) about if they would dial the program down or similar. The CEO's response was something along the lines of "once you give the customer something, it is pretty hard to take it away."

I think the current management would be very well served to remember that quote. "Once you give the customer something, it is pretty hard to take it away."
If customer truly knew and understood how much those free airline points, cashback offers, and free hotel nights are really costing merchants, they would be shocked. The problem is that any savings by not taking reward based credit cards is highly unlikely to be passed back to the consumer. And that's the real issue.
I understand the issue with Visa. Visa has the most cards out there. The most "rewards cards." Fees vary by card depending on the rewards program. The merchant is annoyed.

We will just see where this goes. I highly doubt this will be expanded. In fact, I doubt they will even go through with doing this at FoodsCo. Perhaps some sort of "agreement" will be reached to prevent it.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by pseudo3d » August 1st, 2018, 7:22 am

Why is Kroger specifically banning Visa? It looks like they had some sort of fee dispute, but it's one of the common ones and not something like American Express (which has higher fees than Discover, Visa, or Mastercard, even though they cut their fees down recently...and won a Supreme Court case last month that banned retailers from charging higher for AmEx). If it was the issue of "fees cutting into profitability", they need to just cut credit cards entirely.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by submariner » August 1st, 2018, 8:18 am

pseudo3d wrote:
August 1st, 2018, 7:22 am
Why is Kroger specifically banning Visa? It looks like they had some sort of fee dispute, but it's one of the common ones and not something like American Express (which has higher fees than Discover, Visa, or Mastercard, even though they cut their fees down recently...and won a Supreme Court case last month that banned retailers from charging higher for AmEx). If it was the issue of "fees cutting into profitability", they need to just cut credit cards entirely.
AmEx may have higher fees, but Visa is much more common and most likely eclipses the total AmEx fees by a magnitude. Couple this with the fact that 1: AmEx does not back debit cards (which can be run as credit as well in most cases) and 2: your average AmEx cardholder is generally less likely to use the card for groceries.

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Re: 08/14: 21 Kroger FoodsCo locations to stop accepting Visa Credit Cards

Post by rwsandiego » August 1st, 2018, 7:15 pm

submariner wrote:
August 1st, 2018, 8:18 am
pseudo3d wrote:
August 1st, 2018, 7:22 am
Why is Kroger specifically banning Visa? It looks like they had some sort of fee dispute, but it's one of the common ones and not something like American Express (which has higher fees than Discover, Visa, or Mastercard, even though they cut their fees down recently...and won a Supreme Court case last month that banned retailers from charging higher for AmEx). If it was the issue of "fees cutting into profitability", they need to just cut credit cards entirely.
AmEx may have higher fees, but Visa is much more common and most likely eclipses the total AmEx fees by a magnitude. Couple this with the fact that 1: AmEx does not back debit cards (which can be run as credit as well in most cases) and 2: your average AmEx cardholder is generally less likely to use the card for groceries.
Actually, your average Amex cardholder is less likely to shop at FoodsCo.

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