Kroger to end Visa acceptance at Smiths April 3

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storewanderer
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Kroger to end Visa acceptance at Smiths April 3

Post by storewanderer » March 1st, 2019, 7:34 am

Let's see if this actually happens.

This will really hurt them, especially in Nevada and Utah where Smiths has a lot of competition. I am surprised Kroger is willing to make Smiths a "sacrifice" in this manner. I sort of understood it with Foods Co given the low store count and that it isn't a major market for Kroger.

Also makes for a funny situation in places like Twin Falls, Pocatello, or Idaho Falls where you have the Smiths that won't accept Visa but the Fred Meyer that will.

Well our Smiths up here in the Reno area are very busy. So busy that I don't even want to go in on weekends. This sort of thing will probably alleviate some of that issue. Lots of people pay with Visa cards. I'll just use another card type, one that costs more to process than Visa, but it will make Kroger happy I guess.

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Re: Kroger to end Visa acceptance at Smiths April 3

Post by pseudo3d » March 1st, 2019, 8:14 am

Visa cards are what I use for just about everything, and every place that accepts credit cards accept Visa. If my local Kroger stopped accepting Visa, I'd be REALLY pissed off and never go to Kroger again for anything that I couldn't comfortably carry in my hands, and I imagine others would do the same.

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Re: Kroger to end Visa acceptance at Smiths April 3

Post by Brian Lutz » March 1st, 2019, 9:06 am

to be fair they are still accepting Visa debit cards, and I'm pretty sure I've never paid for groceries on my credit card anyway. And ff, as they claim, the transaction fees exceed the profit margins on their sales, then they would be losing money on purchases made with Visa credit cards anyway. I'm reminded of how Costco not only ended their credit card partnership with AmEx over excessive fees, but stopped accepting AmEx cards in their stores entirely. Granted there's probably a lot less people using AmEx cards than there would be people using Visa or MC, but as far as I can tell the impact has been minimal from that one.

And WinCo, of course, doesn't accept credit cards at all in most markets. Doesn't seem to be hurting them any.

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Re: Kroger to end Visa acceptance at Smiths April 3

Post by storewanderer » March 2nd, 2019, 12:17 am

pseudo3d wrote:
March 1st, 2019, 8:14 am
Visa cards are what I use for just about everything, and every place that accepts credit cards accept Visa. If my local Kroger stopped accepting Visa, I'd be REALLY pissed off and never go to Kroger again for anything that I couldn't comfortably carry in my hands, and I imagine others would do the same.
The dilemma is a lot of the banks and card issuers have focused on Visa Cards over the past decade. Visa is the most common credit card in the market by far.

Sure most people have other cards (like a debit card), but when you limit payment choice in a business where wide card acceptance is expected, it causes problems. People with company or government issued Visa credit cards who are buying things for their business are in trouble if the store does not accept Visa Credit Cards.

This will have no impact on how often I shop Smiths (until Chase Freedom does the 5% Grocery Category Bonus again), but I expect it will have an impact on how often some others shop there.

It will be really interesting to see how this plays out. I feel bad for the store employees who have to deal with this, both from the angle of facing the customers, and also the management who is trying to drive sales in the store but is getting this mess thrown at them that will cost them customers, sales, and is completely out of their control with no way to resolve.

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Re: Kroger to end Visa acceptance at Smiths April 3

Post by Grocery101 » March 2nd, 2019, 11:12 pm

Costco changed from accepting only American Express to only Visa a while back. Did that really affect their business that much? From my observation, the answer is no. Why is this different? Most people carry more than one type of credit card, especially if they are using them to get the reward points. Also, which cards are more expensive to process?

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Re: Kroger to end Visa acceptance at Smiths April 3

Post by storewanderer » March 3rd, 2019, 12:13 pm

There are a few differences with Costco:

1. Costco never accepted all cards in the first place. It was just American Express (a network that currently has about 22% US Card Market Share).
2. A large percentage of the American Express cards being used at Costco were the Costco/American Express co-brand card. When Costco switched credit card partners to Visa, all of those American Express cards got closed and new Visa Cards were issued to all those customers with the co-brand cards. It was not a 100% smooth transition, but it was not a case where suddenly they stopped accepting a card type that has 50+% US Card Market Share.

Now walks in Visa to Costco. There are a lot more people out there carrying Visa Cards than American Express Cards. So when Costco switched over to Visa, they "opened the door" to more credit card users by accepting a card that has 50%+ US market share, and closed the door to the one that has 22% US Card Market Share. And to further distill the American Express situation, Costco issued new Visa Cards to the co-branded Costco/American Express customers. The only customers Costco left "high and dry" with no credit card option were those using a non-Costco American Express card in their stores who had no Visa Card (which I suspect was a very small amount of customers, given Visa's high Market Share). Smiths is leaving "high and dry" all card users of Visa which is a card with 50%+ US Market Share and in many cases (both people I know personally as well as multiple people who has posted on this board in this or other threads) the only credit cards that some people have are Visa Cards thanks to Visa's aggressive card issuance drive over the past decade. I've had a couple MasterCards switched over to Visa by the issuing bank without my consent in recent years because the issuing bank has expanded its partnership with Visa and cut from MasterCard.

The other thing with Costco is that it is Costco. People love it. People drive for miles to get there. People pay a membership fee to shop there. There are not multiple Costcos located within a few miles of everyone's house. There are multiple other grocery stores located within close proximity of most of the Smiths Stores where Kroger is doing this.

American Express and Discover both have higher processing fees than Visa.

So when I see quotes in Kroger's press releases making statements like Visa Card Fees are higher than any other card type, well, of course they are. Visa has 50% Market Share... the next closet card has 20something percent Market Share. So yes, there are more Visa Cards, so the total expense for processing Visa Cards is going to be higher than other card types because the transaction volume is higher.

This comes down to Visa has been too successful with recruiting banks to issue their co-branded rewards cards, and the consumers have responded favorably in mass to those rewards cards. A victim of its own success. So this is going to be a test of customer loyalty. Are customers more loyal to their grocery store, or to their credit card? It will be very interesting to see how it plays out. If it actually plays out. I think Kroger is making a serious mistake here. Kroger has a lot more to lose here than Visa. Especially combined with all of the other mistakes they have been making lately.

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Re: Kroger to end Visa acceptance at Smiths April 3

Post by storewanderer » March 16th, 2019, 11:57 pm

I see the Chase Freedom Q2-2019 "bonus" category is at grocery and home improvement stores.

Automatic 5%++ price increase vs. other grocers for me to shop at WinCo (and now Smiths) under this promotion. I could argue at WinCo the prices are lower. I can't make that argument nearly as often at Smiths, especially lately.

Funny Kroger has a deal with Chase Pay.

Chase runs promotion to drive use of Visa cards that Kroger doesn't want to accept and refuses to accept in a few stores. Kroger refuses to offer Contactless Payment (which supports all card types including PIN-debit) yet gets a tie up with Chase for "Chase Pay" then can't seem to figure out how to roll it out after more than a year. And at this point the roll out is pretty moot since almost every credit card issued by Chase is a Visa Card, until Kroger and Visa resolve their differences.

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