Monday , November 11, 2019

Visa and Kroger Settle Debit-Routing Lawsuit, but Partial Credit Card Boycott Continues

The Kroger Co. and Visa Inc. have settled a 2016 federal lawsuit in which Kroger alleged Visa interfered with its transaction-routing plans for EMV debit cards, Digital Transactions News has learned. In a separate dispute, however, the leading stand-alone supermarket chain is still boycotting Visa credit cards in some of its stores.

The lawsuit that Kroger filed in U.S. District Court in Cincinnati was dismissed July 24. Visa reported the settlement in a recent filing with the Securities and Exchange Commission.

Terms of the settlement are confidential. In a brief emailed statement to Digital Transactions News, a Visa spokesperson said “Visa and Kroger have reached an agreement in principle to resolve the lawsuit that Kroger filed in 2016 related to its acceptance of Visa debit cards.” A spokesperson for Cincinnati-based Kroger did not respond to requests from Digital Transactions News for comment.

Kroger’s civil complaint portrayed Visa as playing the heavy after it first learned in 2015 of Kroger’s plans for accepting the then-new EMV chip cards. Kroger’s planned point-of-sale EMV configuration would have diverted many signature-debit transactions that otherwise would have gone over Visa’s payment network onto PIN-debit networks. Visa threatened Kroger with fines and even the loss of its ability to accept Visa debit cards—a highly popular payment choice among Kroger customers—if it didn’t change its plans, the suit alleged.

Visa denied the allegations and said it was guarding cardholders’ rights to choose how to authenticate a debit transaction.

Another dispute between Kroger and Visa remains unresolved, this one involving what Kroger says are high costs for accepting Visa credit cards. Kroger, which has over 2,800 stores nationwide operating under a number of banners, last August stopped accepting Visa credit cards at one of its small subsidiaries, Foods Co., which has 21 supermarkets and five gas stations in California. In March, Kroger expanded the Visa credit card boycott to its Smith’s Food & Drug Stores chain, which operates 134 stores in seven Western states.

The two companies reportedly are talking, but so far no agreement on the resumption of Visa credit card acceptance has been announced.

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