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Pulling out your credit card to pay for an item seems simple enough – right? It is for the buyer, but in reality, the merchant is paying for that convenience.
When a merchant decides to accept credit cards, they have to pay a host of fees including fees to credit card issuers, credit card networks, and to credit card processors. This can be a burden for small businesses, which is why you might be asked to pay extra for using a credit card in some establishments.
But late last year Kroger, the largest national supermarket chain in the US, decided to ban Visa credit cards at 21 stores in California. And on April 3, 2019, the ban will expand to 250 locations in 7 states.
Now you might not shop at Kroger or its chains, like Smith’s or QFC, but if one of the largest US retailers is banning certain credit cards, what might this mean for those of us in the miles & points hobby and many of the best Visa credit cards?
Kroger Expands Visa Credit Card Ban
This news is unsettling because Kroger is huge – they operate 2,764 supermarkets and multi-department stores and are the second largest retailer in the US behind only Walmart.
If Kroger is feeling the pain from the costs associated with certain credit cards, will other retailers soon follow suit? If Kroger expands the Visa card ban to all of its stores, I’m worried this is exactly what will happen.
Maybe Kroger is just flexing its muscle in the hopes that they can put the pressure on Visa because they do, in fact, still accept MasterCard, American Express, and Discover cards. But Visa charges Kroger more than the other credit card issuers do, and for now, Kroger is taking a stand.
A spokesperson at Visa gave us this statement, “Cardholders are Visa’s first priority. Our goal is to ensure that every cardholder can use their Visa card wherever they wish to shop. When consumer choice is limited nobody wins.
“The Visa network delivers significant value for merchants including access to more customers, increased sales, security and fraud protection, a quick and convenient checkout experience, and ongoing innovation and implementation of the latest technologies. Kroger enjoys all of these benefits, and there is a cost for these services, like any other.
“We have a long-standing relationship with Kroger and its family of stores and we continue to work toward a resolution so our cardholders can use their preferred Visa credit cards at Foods Co. and Smith’s without Kroger-imposed restrictions. Visa debit and prepaid cards continue to be accepted across all Kroger Stores, including Foods Co. and Smith’s.”
The Impact the Ban Will Have (Now and In the Future) on Travel Rewards
For everyone in the miles & points hobby, it’s already a task to keep track of which credit card to use for various types of purchases. Will we soon have to track which store accepts which credit cards? That would be a huge hassle because a number of the best credit cards for travel are Visa cards, like the Chase Sapphire Preferred Card and Capital One® Venture® Rewards Credit Card.
Kroger may be able to successfully negotiate lower Visa fees for itself, but that would impact the bank’s bottom line and, in turn, could affect how generous banks are (or aren’t) when it comes to travel rewards. If banks are making less through fees, it’s likely customers like us who collect travel rewards that will be negatively affected.
Speculation aside, news like this is a gentle reminder to earn and burn your travel rewards. Don’t hoard them and delay your dream trip!
The landscape of the miles & points hobby is constantly changing – deals come and go and a trick that works one day might not the next. So it’s best to put the rewards you might earn with any of the best Visa credit cards to good use while you still can.
Do you believe Kroger’s Visa credit card ban will have a ripple effect on other major retailers? And do you think it will have an effect on the miles & points hobby? I’d love to hear your thoughts in the comments below.