Discount Grocer Aldi Reverses Course and Now Accepts Credit Cards

The prominent, slightly self-effacing graphic on discount grocery-store chain Aldi Inc.’s home page says it all: “OMG! We FINALLY Accept Credit Cards!”

Indeed, Batavia, Ill.-based Aldi is believed to be the last major grocery holdout in accepting general purpose credit cards, which typically cost merchants more to accept than the PIN-based debit cards that price-conscious Aldi has accepted for years. But on Monday Aldi announced that it now takes Visa, MasterCard, American Express, and Discover credit cards.

Aldi did not make a spokesperson available to Digital Transactions News for comment, but the change comes as Aldi, which has nearly 1,500 stores in 32 states, prepares to enter the Southern California market. That move will intensify competition for shoppers who now go Wal-Mart Stores Inc. for low-cost groceries, or to the many other established grocery competitors in the nation’s most populous state.

Chief executive Jason Hart said credit cards will add to the convenience of shopping at Aldi, which has experimented with taking credit cards in the past. The addition of credit cards will have no impact on the prices customers pay, the company said.

“As Aldi continues to evolve by expanding its product lines and moving into new markets, the way we do business will continue to evolve as well,” Hart said in a news release. “We care about being able to make our customers’ shopping experiences simpler and better every time they come to see us, and offering them the convenience of using their credit cards will help us do just that.”

Grocery stores typically have low profit margins, which for years made them reluctant to incur the cost of credit card discount rates. But that attitude gradually changed as the card networks pushed to expand their merchant bases in the 1990s and consumers began to take acceptance of credit cards for granted at all but the smallest retailers. It’s become harder for Aldi to resist that attitude, according to Adil Moussa, principal of Omaha, Neb.-based Adil Consulting LLC, which specializes in the merchant-acquiring industry.

“They cannot really afford to lose market share because they’re not accepting credit cards,” says Moussa.

Aldi says it serves 30 million customers monthly. The company plans to open its first Southern California stores later this month, and plans to have nearly 2,000 nationwide by 2018. The U.S. operation is a unit of Germany-based Aldi Süd and a corporate cousin of the Trader Joe’s grocery chain.