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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?

By Karen Datko Jul 25, 2012 5:40PM

Image: Full Shopping Cart in Grocery Store © Fuse/Getty ImagesKroger, 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. 
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.
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:

 

 

20Comments
Jul 26, 2012 6:48AM
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grocery stores and other retailers already built in the cost of using credit cards, in the price of the items you purchase...now we will get ripped off more for using credit... another scam the people
Jul 26, 2012 11:12AM
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Thank you uncle Sam. In order to control one greedy monster (banks) , you created hundreds of other greedy monsters (all merchants and grocers....). If merchants start charging extra for using plastic, I would start using cash and wait for the banks to start imposing cash counting fees on these same greedy merchants because they will be draining the banks resources with these cash verification transactions, and then it goes round and round....  In the end, we, the consumers pay for all of this, and nobody else.
Jul 26, 2012 11:37AM
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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.

Jul 26, 2012 8:41AM
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It seems like everyone is just floating trial balloons at this point - it would be ridiculous for Kroger to charge a multitude of different prices for cash, credit cards with low swipe fees, credit cards with high swipe fees, debit cards, whether you use their loyalty card, etc. etc.  And with Walmart and Target speaking out against the fees, it seems that everyone is just trying to raise awareness among consumers that the fees exist at all, in an effort to pressure the credit card companies to eliminate the fees altogether. More on couponsinthenews-dot-com!
Jul 26, 2012 10:47AM
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i don't understand, the merchants are going to get part of a 7 billion dollar settlement, their 'swipe' fees are set to go down, but now they want to charge the public more if they use a credit card?  no, wait, i do get it, it's all about more GREED!
Jul 26, 2012 1:21PM
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If Kroger is stupid enough to do this, then I will never go to Kroger again. Its simple as that.
Jul 26, 2012 1:15PM
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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.

Jul 26, 2012 11:54AM
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I only moved to a Kroger area this year.  I'm already sitting the fence.  They seem to be a high pricepoint provider in GA.  Already been looking for alternative stores, and find them easily.  This fee would just be the needed push to get me to drive an extra couple miles and consolidate trips to boycott Kroger altogether.
Jul 26, 2012 4:12PM
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Kroger is already higher than hell. Bye, bye, Kroger, Dillons, Bakers.
Jul 26, 2012 10:06AM
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In many states, it is illegal to charge more for credit card purchases. The charges the companies wanted to hit him with are the reason my dad never accepted them.
Jul 26, 2012 12:39PM
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Why are all of you blaming the retailers? It's the Credit Card Companies and Banks that are charging the fees. Some as much as 3% of the total sale! It's unfair to the retailer and unfair to the customer. They are collecting on both ends of a transaction! 18-30% for consumers and then they suck another 2.5 - 3% off the merchants. Why are retailers the bad guys? One way or another we have to make up the fees to stay in business and one way or another the Consumer is going to pay, if not a fee for charging then you will pay through higher prices. Retailers are not there for your convenience, they are there to make money !
Jul 26, 2012 9:04AM
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Since when is carrying cash an inconvenience?  If everyone paid cash think how much you would save retailers, and this in the long run would bring prices down.  Everyone thinks you have to have plastic.  Send a message to the banks put away your cards and let them choke on their fees.
Jul 26, 2012 1:35AM
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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.

Or

 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.

 

 

Jul 26, 2012 5:37PM
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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.........

Jul 26, 2012 7:27AM
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I have a rewards card that would more than offset the 2 percent extra charge, so I'd still use that. However, I'd otherwise carry cash.
Jul 26, 2012 6:27AM
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Why would it be inconvenient to either pay in cash or directly from your checking account by using a debit card? Seriously?
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