The 16-year marriage between American Express and Washington-based Costco Wholesale Corp. stores ends June 19, the last day Amex cards will be accepted at checkouts inline and online. Starting Monday, June 20, the new partnership between Costco and Visa that was announced more than one year ago will begin.
Monday is when the wholesale club’s stores will stop accepting American Express and start taking only Visa (as well as debit cards, checks and cash). At Costco.com, customers will no longer be able to check out with an Amex card, but will still be able to use MasterCard and Discover in addition to Visa for online purchases. These changes are a dramatic one for many of Costco’s 81 million members worldwide.
When originally announced, the implementation was supposed to be in April 2016. However, Costco and Visa have taken pains to try to make the transition easier for those with the warehouse chain’s store-branded Amex credit cards to ensure they have new Visa is cards. Those American Express cards will no longer be good, not just at Costco, but anywhere else too. (So, customers who may have used them for monthly automatic payments need to beware of the need to set up new payment options.)
Costco comprised a considerable amount of the American Express business. Reportedly, 8 percent of all purchases made on American Express cards were made at the membership-based stores in recent years. Additionally, 10 percent of all Amex cards issued were Costco-branded ones. However, the two companies had a less than amicable separation after being unable to agree on a new deal last year.
For Costco, the switch means a lot more consumers could shop (provided they join) at the membership store. There are approximately 118 million Visa cardholders in the U.S., which is reportedly two to three times as many as Amex cardholders.
Costco is replacing its store-branded American Express credit cards with new Costco Anywhere Visa Card from Citibank. The card comes with benefits such as no additional annual fee beyond the Costco membership fee, a higher percentage of cash back on gasoline, restaurant and other purchases than earned with the previous Amex card and well as twice the cash back bonus given previously at the warehouse stores.
Since so many people already have Visa cards, several other banks that have issued them are taking steps to encourage their cardholders to not bother getting or using a Costco Citi Visa card. For example, Chase is offering holders of its “Freedom” card a 5 percent cash-back bonus on their purchases at warehouse stores, including Sam’s Clubs and others besides Costco. Originally, the deal was to end late Jun; however, probably due to the delay in Costco’s implementation, the bonus-earning period has been extended through the end of this year.
The changeover has received a lot of publicity about the credit card partnership switch and there have been signs posted in the Costco stores for some time promoting its start. However, it can be anticipated that there will be some delays at the checkout line in stores for some time as people pull out their Amex cards forgetting about the transition.
Written and Edited By Dyanne Weiss
USA Today: Those big changes at Costco: What you need to know
Los Angeles Times: Costco picks Visa and Citigroup as new credit card partners
US News: What to expect from Costco’s new credit card deal with Visa and Citigroup
The Motley Fool: American Express Loses, But Who Wins the Most With the New Costco Card Deals?
Photo courtesy of Nandaro – Creative Commons license