Kroger may charge more to use credit card
If you could save 2% on your grocery bill by paying with cash, would it be worth the inconvenience?
Kroger, the nation's largest supermarket chain, is pondering whether to charge more for shoppers who pay with a credit card.
"Paper or plastic? That question could soon take on a whole new meaning at your local grocery store," wrote Lisa Bernard-Kuhn at Cincinnati.com, the Web presence of the Cincinnati Enquirer.
That's one of the consequences of the recent $7 billion settlement of a lawsuit filed seven years ago over how the major credit card companies charge swipe fees to retailers that accept credit cards. The card companies prohibited those retailers from passing on a surcharge directly to those customers who pay with credit cards. The swipe fee for credit cards averages 2% of the purchase price.
The New York Times summed up the settlement:
The tentative deal allows merchants to offer discounts to customers paying with cash or checks and to impose fees when they pay with credit cards. Businesses can also negotiate directly with Visa and MasterCard over the rates they pay for credit card transactions.
(Post continues below video.)Many businesses contacted by The New York Times wouldn't say how they'll proceed, with the exception of L.L. Bean, which has "absolutely no plans" to charge more for credit card purchases. Darden Restaurants, owner of Olive Garden, Red Lobster and other brands, has reportedly said the same thing.
Don't head to the ATM machine before your weekly grocery shopping trip just yet. There are a few details to consider:
- A judge has yet to approve the proposed settlement in the credit card lawsuit. Meanwhile, Wal-Mart, Target and the National Association of Convenience Stores have urged retailers to reject the deal.
- Kroger may just be floating a trial balloon. "There is a lot more work to do before any final decision is made," Kroger spokesman Keith Dailey told Bernard-Kuhn. "We haven't made any decisions at this point."
- The laws of these states prohibit an extra charge for credit card users: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.
- Also, reports John Matarese of WCPO.com in Cincinnati:
The store has not yet said if it would also charge this higher price to debit card users as well, though it does not appear likely, as debit cards are not part of the settlement. Also, the company has not yet said if stores would charge the higher price for American Express and Discover cards, as they were not part of the settlement.
The Dodd-Frank financial reform law limits the swipe fees on debit card purchases to no more than 24 cents.
But still, it's worth some thought. Consider these questions:
- Would you be happy paying with cash if you could save 2% of the total purchase price? Is it worth the inconvenience of having that much cash in hand? Readers who commented on an Oakland Press story about Kroger's idea generally said they'd find somewhere else to shop.
- Would this cause a big change in your normal routine? Fox Business reports:
A 2011 Aite Group study projected that the use of cash in the United States is expected to fall 17% between 2010 and 2015. An April 2012 poll showed that 43% of Americans said they have gone through a full week without paying for anything in cash or coins.
- Is the cash back or airline miles you get with your rewards card worth paying a higher price for groceries or anything else you buy, if it happens that other retailers charge a higher price to credit card users? Plus, how about the other benefits your credit card provides, like extended warranties and fraud protection.
- Could this get far too complicated for the regular shopper to negotiate: Is it better to use plastic for this purchase or not?
More from MSN Money:
- Will credit card users now have to pay swipe fees?
- Credit cards with hidden benefits
- Find a better credit card
- Your 6 secret credit card perks
- A little-known way to fly for free
- The 7 deadly credit card sins
What'll I do? Cash, checks, and a likely end to impulse purchases. Did it before, can easily do it again. Heck, my cash-only grocery, closer to the house no less, offers equal to better prices than the Kroger market I usually shop at, even considering coupon deals.
Years ago many personal computer outfits (esp. mailorder) tried this penalty-tier pricing for credit cards. Not one of them is in business today.
You merchants want to shoot yourself in the foot? I'll provide the bullet.
I am 60 yrs old and been shopping at Krogers since I was 16 yrs old. Krogers has continually went down hill through out the decades from products they carry to the amount they charge for their products. It does not suprise me they have suggested passing this charge on to their customers.
If you looking for brand name products, don't shop Krogers they have replaced nearly all of the name brands with their generic Krogers brand.and at a cost very near the brand name products. Myself I would love to see customer adbandoment such as what has occurred with Bank of America by losing large amount of their customers.only then do these large companys sit up and take notice because they do not care about customers nor the services that they are providing to the customers.
Credit card companies charge a percentage for handling...the drought will make groceries go up.
So the inconvenience is worth saving 2% and not giving it to credit card companies.
I could find some good recipes, recycle cardboard, to create some type of dish to eat...maybe a flambe. 2% is 2% and my grocery bill will be smoking soon the way food prices are rising.
Wait till all retailers want to charge for using plastic......And you start paying with CASH .........OH WAIT CRIMINALS WON'T KNOW THIS .......DO YOU FEEL SAFE NOW WITH ALL THAT CASH IN YOUR POCKET....MAYBE THE RETAILERS WILL HAVE SECURITY FOR THEIR CUSTOMERS SAFETY.......HEY LOOK AT ALL THE NEW JOBS CREATED......ECONOMY LOOK OUT....HOLEY COW KROGERS JUST SOLVED PART OFTHE PROBLEM WE ARE ALL EXPERIENCING.........
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
A WisePiggy.com poll found that many Americans, especially older ones, do little or nothing to protect their credit scores and reports. See why you should check your credit history.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'