BUSINESS + ECONOMY

Smith’s responds to complaints about ban on Visa Credit Cards

Mar 4, 2019, 3:00 PM | Updated: 7:35 pm
Smith's vaccinations...
FILE: A customer leaves Smith's on 6th Avenue in Salt Lake City March 1. Smith's will begin offering COVID-19 vaccinations to Utahns who are 70 and older beginning next week. (Photo: Laura Seitz / KSL)
(Photo: Laura Seitz / KSL)

Smith’s provoked major controversy this week by announcing that, moving forward, they would be banning Visa credit cards from their stores altogether.

For many Utahns, that new policy leaves them with a tough choice: either giving up the credit card or giving up Smith’s altogether.

It’s a decision a lot of people are going to have to make. KSL’s Dave & Dujanovic conducted an informal poll of more than 3,000 Utahns through Facebook which revealed that about 34 percent of those who responded pay for groceries with credit cards.

Some have taken to the internet to vent their frustration and send a clear message that, in the future, Smith’s won’t be getting their business:

But to give Smith’s the opportunity to defend their decision, Dave & Dujanovic invited spokesperson Auriana Martindale to join the show and explain why they’ve decided to cut Visa out of their business.

Smith’s defends its decision

Smith's cashier

A cashier at Smith’s puts through a customer’s purchases. (Photo: Jason Olson, Deseret News)

“This was a very hard decision to make,” Martindale told Dave & Dujanovic, acknowledging that, while a little blowback over the new policy was inevitable, it was something they wanted to avoid. “Our customers are what keeps Smith’s alive and thriving.”

Martindale claims, however, that banning Visa credit cards was necessary to keep Smith’s prices low.

“Every time that a customer swipes their card, a retailer such as Smith’s is charged for each transaction,” she says. “And the problem here, as it relates to Visa, is the fee charged by Visa’s issuing banks is excessive… Their credit card is significantly higher than any other credit card brand that we accept.”

The fees that Smith’s has to pay out to Visa every time a customer swipes one of their cards add up, Martindale says, and they start to eat into the company’s profit margins.

“Our commitment and our promise to them is that we’re going to provide those quality products at a low price,” Martindale says. “In order to keep those prices low, we have to control costs. And, unfortunately, Visa hasn’t left us the flexibility to do that.”

Smith’s isn’t the first store under the Kroger’s umbrella to try the idea out. Last year, the California-based grocery store FoodCo started banning Visa Credit Cards. When they did, Martindale says, they saw customers simply switch over to debit cards, freeing up the company’s profit margins.

Only Visa credit cards are being banned at Smith’s. All other credit cards are still going to be accepted, as will Visa Debit Cards.

And Martindale says that the company will continue to negotiate with Visa to try to get their fees down to a rate that will make it profitable for the company to accept their cards. “No option is certainly off the table,” she told Dave & Dujanovic.

Dave & Dujanovic’s listeners react

Listeners at home had mixed reactions to Martindale’s explanation. A number of them called in to voice their concerns, explaining why they use credit cards at grocery stores and whether this will be enough to lure them into another store.

Even KSL Newsradio’s traffic expert Andy Farnsworth joined the show, admitting that he and his wife had spent the whole morning talking about what they were going to do about Smith’s decision.

If you missed the show live, you can still catch everything Martindale had to say and how our callers reacted on the Dave & Dujanovic podcast:

Dave & Dujanovic can be heard weekdays from 9 a.m. to noon on KSL Newsradio. Users can find the show on the KSL Newsradio website and app, as well as Apple Podcasts and Google Play.

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Smith’s responds to complaints about ban on Visa Credit Cards