Kroger Testing Visa Credit Card Ban

Kroger recently announced a ban on Visa credit cards at 26 select stores. They are taking a strong stance on the high credit card fees that businesses pay to run transactions with Visa credit cards. The news has brought up a lot of questions about whether this is going to happen across stores nationwide and whether Kroger will be able to negotiate with Visa. We want to examine the root causes behind this move and clarify what is really happening here.

What’s Really Going On Here

We took a deeper look into Kroger’s recent announcement. It’s important to note this is only being rolled out in 21 stores and 5 gas stations in California. At these limited stores, customers will still be able to use a Visa debit card at the checkout. Through Kroger’s partnership with Mastercard, you can apply for a co-branded Kroger Mastercard to earn various loyalty rewards.

The initiative to ban Visa may be a strategic move to drive customers to sign up for their credit card. They know that they cannot get rid of Visa altogether because it would impact their revenue by inconveniencing customers, but this test this credit card ban in 26 locations may prove positive results.

This Strategy Has Been Done Before

This is not the first time we have seen businesses pick and choose what type of card they will accept. For instance, Costco used to have an exclusive partnership with American Express before now shifting to Visa. Sam’s Club did the same thing by only accepting Discover some time. Businesses are motivated are simply motivated to increase profits and this strategy is not new.

The Future of Accepting Payments

We are seeing more big businesses like Walmart and Amazon attempt to retain control over the payment experience to increase their bottom line. This trend could continue, but only with the major businesses that have enough influence over their market. Amazon’s approach to this is facilitating the entire payment process from issuing credit cards, processing mobile payments, and an exclusive app needed to shop in their new  Amazon Go convenience stores.

As for mid or small-size business, this is much harder to do. When you begin picking and choosing what cards you accept, your customer base gets smaller. When dealing with a small customer base to begin with, this can potentially hurt you more than the fees.

 

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