Kroger weighs expanding a ban on Visa credit cards

V PE Ratio data by YCharts

V PE Ratio data by YCharts

Kroger, which is the parent company of Mariano's, said it will stop accepting Visa cards at 21 stores and gas stations in California next month.

Giant supermarket chain Kroger will stop accepting Visa credit cards at its Food Co., stores in California and may expand the ban.

The grocery store chain announced the policy change on Monday, saying it was due to Visa's interchange rates, which merchants pay to banks whenever a customer swipes a corresponding card at the store. That will save on the costs associated with Visa's interchange rates and network fees, according to Foods Co.

Visa released a statement to CNBC that said it was frustrated by the move. If that means a ban at additional stores, "that's what we will have to do", he said.

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Kroger said it will pass along the savings from reduced fees to the customers, but Visa expressed disappointment in Kroger's action.

Retailers pay almost $90 billion a year in swipe fees. MasterCard and other credit card issuers charge these fees as well. "But we believe this change will benefit all our customers by allowing our Foods Co. stores to continue to offer the things our customers value most, including our low prices, fresh produce and services". Kroger has been in negotiations with Visa and other companies to make credit-card sales less burdensome, Hjelm says.

In a statement to FOX Business, a Visa spokesperson said the bank was disappointed by the decision and remained committed to working with the grocer to "reach a reasonable solution". "We don't believe we have a choice but to use whatever mechanism possible to get it back in alignment".

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