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Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

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Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#101

Post by ericpauley »

mehrdadn wrote: post #28
oasisbob wrote: post #21

Earlier quoted context omitted.

They do, but different cards on different networks have vastly different fees. The consumer using Visa SuperRewardsPlatinum probably doesn't know that it's costing the retailer more than other cards when they use it. The originating bank does though, which is exactly why they chose that network in the first place. The market is opaque and doesn't lead towards lower fees and greater efficiency. It reminds me of super-…

> The consumer using Visa SuperRewardsPlatinum probably doesn't know that it's costing the retailer more than other cards when they use it. You mean the merchant pays a higher fee when you use one Visa card vs. another Visa card? Or you mean compared to Mastercard etc.?

Yes! Visa/Signature/Infinite have different fee schedules, by a large margin.

I was once at a smaller restaurant and they didn't want to take my Amex for fear of fees, little did they know my Visa Infinite had an even higher swipe fee.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#102

Post by timr »

function_seven wrote: post #45
deelowe wrote: post #36

Earlier quoted context omitted.

I seriously doubt the retailer pays different fees depending on th card. That sounds bizarre.

They do. https://www.helcim.com/us/visa-interchange-rates/

Those are the rates paid by the processor to the bank. They're not the rates paid by the business to the processor.

Per VISA's website:

"Merchants do not pay interchange reimbursement fees—merchants negotiate and pay a “merchant discount” to their financial institution that is typically calculated as a percentage per transaction."

https://usa.visa.com/support/small-business/regulations-fees...

It seems logical that VISA doesn't want merchants to be able to determine per-card costs, since this keeps merchants from trying to optimize their fees.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#103

Post by mehrdadn »

ericpauley wrote: post #101
mehrdadn wrote: post #28

Earlier quoted context omitted.

> The consumer using Visa SuperRewardsPlatinum probably doesn't know that it's costing the retailer more than other cards when they use it. You mean the merchant pays a higher fee when you use one Visa card vs. another Visa card? Or you mean compared to Mastercard etc.?

Yes! Visa/Signature/Infinite have different fee schedules, by a large margin. I was once at a smaller restaurant and they didn't want to take my Amex for fear of fees, little did they know my Visa Infinite had an even higher swipe fee.

Are you sure it was "fear of fees" rather than "not having a contract with AmEx"? I would assume Visa's agreements wouldn't let them just refuse your Infinite, since it would defeat the point of the card if they could just refuse the high-fee ones. (Just a guess; I don't know how it works.)

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#104

Post by toomuchtodo »

kevin_thibedeau wrote: post #96
toomuchtodo wrote: post #75

Earlier quoted context omitted.

Kroger has most likely done the math with their Kroger rewards program (which has historical payment data), and has determined most people won't care and will switch to debit or a non-Visa CC network instead.

Wal-Mart has had success with forcing debit transactions to withhold merchant fees.

They’re also trying to push Walmart Pay as well. At their scale, it’s worth it.

Despite the pain, I still think Walmart should’ve acquired and rebranded a bank, and offered financial products. Would do wonders for the unbanked, while keeping their transaction fees down.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#105

Post by rileymat2 »

sokoloff wrote: post #97
jlarocco wrote: post #13

I'm not sure I understand why this is a big deal all of the sudden. Don't retailers already account for these costs when they're choosing prices?

The average profit margin for a mainstream grocer (like Kroger) is 1-2 percent. It's a low-margin, high-volume business. Said differently, it's exactly the type of business that I'd expect to care deeply about transaction fees.

Is this the overall profit margin, or is it what it is once it accounts for spoilage and other losses (theft ect.)?

I ask, because 3% cc fee from a 2 percent margin is huge, but a 3% fee from a 80% margin that averages out to 2% because of spoilage is much smaller.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#106

Post by amf12 »

At this point they should consider investing in their own debit-like card issued by themselves. You prepay it with $100, you get extra 5% loaded on the card, and additional discounts for using it. The retailer saves on per transaction fees since they will have to only pay it once for $100.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#107

Post by adrr »

mehrdadn wrote: post #61
aeternus wrote: post #58

Earlier quoted context omitted.

Not always, even the exact same card can run on different networks. For example: 1) You buy a product with your Visa debit card and enter your pin 2) You buy the same product, same card, but don't enter your pin 3) You buy the same product, same card, but your card won't swipe so the cashier manually enters your card number Each of these scenarios will likely result in different fees to the merchant.

This is avoiding and completely missing the point of my question. I was not asking whether card fees can vary based on how the card is processed. I was asking to precisely what extent they can vary based on the card itself . Please re-read my entire question above.

Variable interchange fees range from 0.05% for Visa Debit Cards(Big Banks) to 2.4% for VISA Infinite for most merchant categories. Fees vary by card type and also merchant type.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#108

Post by zamadatix »

rileymat2 wrote: post #105
sokoloff wrote: post #97

Earlier quoted context omitted.

The average profit margin for a mainstream grocer (like Kroger) is 1-2 percent. It's a low-margin, high-volume business. Said differently, it's exactly the type of business that I'd expect to care deeply about transaction fees.

Is this the overall profit margin, or is it what it is once it accounts for spoilage and other losses (theft ect.)? I ask, because 3% cc fee from a 2 percent margin is huge, but a 3% fee from a 80% margin that averages out to 2% because of spoilage is much smaller.

The latter, if it was the former they'd be out of business by now.

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#109

Post by ashishb »

https://www.bostonfed.org/publications/public-policy-discuss...

" On average, each cash-using household pays $149 to card-using households and each card-using household receives $1,133 from cash users every year. Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general."

Re: Credit-Card Backlash Mounts as Kroger Weighs Expanding Visa Ban

#110

Post by adrr »

mehrdadn wrote: post #103
ericpauley wrote: post #101

Earlier quoted context omitted.

Yes! Visa/Signature/Infinite have different fee schedules, by a large margin. I was once at a smaller restaurant and they didn't want to take my Amex for fear of fees, little did they know my Visa Infinite had an even higher swipe fee.

Are you sure it was "fear of fees" rather than "not having a contract with AmEx"? I would assume Visa's agreements wouldn't let them just refuse your Infinite, since it would defeat the point of the card if they could just refuse the high-fee ones. (Just a guess; I don't know how it works.)

Merchants do discriminate against card types. Some merchants will take Visa debit and not any other visa cards. Some will charge extra like Venmo and Verizon if you use anything but a Visa Debit. Some subscription merchants won't let you use non-reloadable prepaid card especially if they offer a low amount trial and its also against the merchant agreement to charge a non-reloadable prepaid card with the recurring flag which subscription merchants set to get better success rate on auths.
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