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MarketWatch has a story about the potential impact of Kroger’s decision to no longer take Visa cards at the 21 stores and five gas stations that are part of its Foods Co chain, a reflection of its frustration with Visa’s interchange or “swipe” fees.

The story notes that “Kroger has a partnership with Mastercard for its loyalty program, and produces co-branded Mastercards,” and “more Kroger customers could now be encouraged to use Mastercard, he said, or simply turn to debit cards when making purchases.”

Craig Shearman, vice president for government affairs at the National Retail Federation (NRF), says that “it looks increasingly likely that retailers will feel emboldened by the debacle between Kroger and Visa.” Shearman suggests that banning cards is one of the options available to retailers who “have little ability to negotiate with credit-card companies, who have ‘extreme market power’ when it comes to how customers pay for purchases.”

“I think retailers are definitely getting more frustrated,” Shearman says.
KC's View:
I know Visa says it is open to negotiation, but I think that means it is looking to figure out how to make Kroger an offer it can’t refuse. Though, I’d guess Visa could be a little worried that this attitude might be catching.

I think it is critical for retailers to find a way to educate consumers about the cost of credit card usage, so they can make intelligent decisions and understand why the retailer is doing certain things; this won’t be easy, because the last thing that credit cards want is any sort of transparency.

But there’s one other thing. The MarketWatch story points out that “a George Mason University study last year found that retailers don’t typically lower prices when they reduce credit-card swipe fees.” Which strikes me as sort of disingenuous.