Costco names Citi, Visa as new credit card partners after AmEx deal ends

[Omaha Steve]

Source: LA Times

By JAVIER PANZAR

Citigroup Inc. will become the exclusive issuer of Costco's credit cards and Visa Inc. will replace American Express as the credit-card network for Costco’s stores starting in 2016, the retailer announced Monday.

AmEx has been the only credit card accepted at Costco for the last 15 years. The deal had been a boon for both companies, analysts said, but they ended their partnership last month.

The Costco partnership represented 8%, or $80 billion, of AmEx's billed business and about 20%, or about $14 billion, of its interest-bearing credit portfolio, Richard Shane of JP Morgan Chase & Co told The Times last month.

Under the new agreement, transactions will be processed by Visa, and Citi will become the exclusive issuer of co-branded credit cards on April 1, 2016.

FULL story at link.


Read more: http://www.latimes.com/business/la-fi-costco-visa-20150302-story.html

---

I wish there was a Costco close to us.

[closeupready]

1. Bought a bunch of stuff at my Costco last weekend, lol.

And I bank at Citibank so this is win-win for me. K&R

[hollysmom]

2. not for me, I am a long time Amex user, but don't need a new visa card. If they won't take the one

I have, not going to get another, will be cash business from now on

[SoCalNative]

6. I'm pretty sure they will accept any card with the VISA logo

Citibank will just be their partner for the Costco Visa, replacing the Costco Amex.

[lutefisk]

12. "Costco will accept other Visa cards under the new agreement"

That's good. No need to get a Citi card unless one wants the co-branded Costco card.

[hollysmom]

15. thank you very much, but I looked, I have a master card, not a visa, sigh. n/t

[BlueCaliDem]

51. That's good news! Easier for us, too. eom

[closeupready]

8. Hear ya. Cash is typically how I pay. Credit cards are toxic, IMO.

But if I AM in the market for one, this would be useful, on several levels.

[oldandhappy]

27. Rewards!

I use the rewards money to buy staples for the house for the year. On my way later this week to stock up on toilet paper, laundry soap, dish soap, etc. Feels free!

[PassingFair]

57. I used my Amex almost exclusively for Costco and gasoline purchases....

The "rewards" paid for my membership fee with a little extra left over...

I will probably stop using it now.

[still_one]

10. I tend to be on the same page as you

[KeepItReal]

3. I don't know what AmEx was thinking in letting their partnership end

I'm sure Costco's terms could not have been that egregious.

Looking forward to earning some airline miles with my Visa going forward, though.

[Mosby]

22. you know who pays for your miles and your disney points?

The retailer, that's who.

[closeupready]

24. "The retailer, that's who." So what. Fine with me.

??

[Roland99]

4. My wife likes Costco but we dropped our membership

BJ's (which takes mfr coupons!) and Sam's Club are closer.

But...we've made a couple treks up to near the closest Costco lately and just might be joining again.

[drmeow]

7. Unfortunately Sam's Club

is a Walmart store

[Roland99]

16. I know

we don't get much there, though. Mostly chicken, a certain type of cheese, perhaps some fruit and there's a pre-cooked bacon that we all like.

Don't shop at WalMart otherwise.

[tridim]

5. Costco takes all debit cards.

Which is good because I don't use credit cards.

[C Moon]

9. Years ago my wife started going to Cosco.

I was always against it because I thought it was another Walmart type employer, and I thought people bought much more than was needed.
It wasn't until I was here on DU, that I appreciated how good they treat their employees.
Now I think it's a great store, albeit very crowded. And as a Californian, I found it's a great place to start /keep up the earthquake emergency supplies.

[TreasonousBastard]

11. I'm confused...

aren't we supposed to hate Citi as one of those horrible banksters ruining the planet? Or doesn't that count when it's the sainted Costco we'd stop doing business with?


(Fighting the good fight is easy when you don't have to justify your own choices and can just preach from your anonymous sofa.)

[Omaha Steve]

14. This would only be for individuals that WANT a Costco card

My sister works for AmEx. They sure don't treat the workers well.

At least Citi's call centers are located in the USA.

[TreasonousBastard]

17. Of course it is. Just like people who...

want to shop at Wal-Mart or Hobby Lobby.

My point is simply amusement at the common, and often clueless, shifting of ideals depending upon whose critter is targeted.

(Like buying a book on union organizing at Amazon...)

[Omaha Steve]

18. Costco itself allows employees to unionize if they want

AmEx has a good reputation. The contracted out jobs are another story.

http://www.indeed.com/cmp/American-Express/reviews

I posted about the credit carrier at Costco being up for a bid a few months ago. To bad this happened.

[Mosby]

20. Amex charges twice what visa and mc charge to retailers.

bunch of thieves.

[sendero]

44. Exactly......

..... fro the life of me I cannot figure out why Costco ever entered into an agreement with AmEx. All cards suck, but they take it to a whole new level with a 4% or so discount.

This seems like a positive development to me.

[Mosby]

21. Maybe you don't understand

You cannot use credit cards at Costco.

Except for the one that's in bed with them, which is now Citibank.

It's just one more reason why Costco is where the rich folks shop, because most folks like to put large purchases on credit cards.

[Omaha Steve]

23. My understanding is it will take any Visa since that is in the release too

NEW YORK (AP) — Costco says it struck a deal for Citi to be the exclusive issuer of its co-branded credit cards, with Visa replacing American Express as the card network.

[closeupready]

26. Sure, you can. The agreement at issue here is about getting an extra yearly discount

on your member-year's purchases. So that if you purchase $2,000 in items from Costco on the Costco-affiliated card, then you'd get 2% of that $2,000 back in the form of a check, or $40.

[Mosby]

28. costco does not take CCs except for the costco Amex.

They take any kind of debit.

[closeupready]

29. Oh, okay, it appears you are correct. At any rate, I don't use credit cards,

so that's not a problem for me. Peace.

[lutefisk]

30. Any American Express card, I believe

My Hilton HHonors American Express card has been getting quite a workout at Costco lately.

[Ilsa]

32. So if you want the discount points for Costco,

You need a Citi card? Or will any Visa do?

[Omaha Steve]

33. The way I read it is they will take any Visa

So YOUR card would get points under your cards program like flyer miles, not the rebate on groceries.

[Hekate]

25. Costco treats their employees like human beings and not like cattle. They have a decent business...

...philosophy, and treat their customers well.

I'm not sure what your beef is, or the source of your amusement. I am capable of differentiating among different kinds of businesses.

Now if your beef is with Citi, you can always pay cash at Costco.

[LanternWaste]

31. It can be terrible confusing to anyone who is unable to take the bad with the good.

"I'm confused..."

It can be terrible confusing to anyone who is unable to take the bad with the good, and is more intent on criticizing the convictions of others rather than examining their own.

[TreasonousBastard]

46. Even more confusing to those who don't get irony.

[City Lights]

41. I won't get a citi card just to use at Costco.

Once this goes into effect I will use cash at Costco.

[TreasonousBastard]

47. I've been using another bank's Visa check card there for a while...

They just won't pay the higher credit card fees for cards they don't have a deal with.

[Dustlawyer]

13. Just got my Costco Amex a couple of months ago, only to discover that they put my street name

as my first name and still approved me. Filled out all of the change of name forms with Amex and now I will get another card with the wrong name!

[Mosby]

19. exclusive contracts between CC companies and retailers should be illegal.

Talk about anti-competitive, predatory behavior, this kind of crap sucks for the consumer.

[Ruby the Liberal]

35. Retailers brand with a bank (Citi in this case) for cards

that can be used anywhere. You can use a Costco Visa card at Lowes or the grocery store. Counter that with a department store credit card, which is inhouse and can only be used at that store.

Costco just changed their payment network from AmEx to Visa - meaning you can use ANY Visa card at their stores. Not good news for those who have AmEx, Discover or Mastercard, but any Visa card will work.

[Mosby]

36. Costco switched it's exclusive credit cards from Amex to Citi VISA

They are going to get discounts from Citi just like they used to get from Amex. They will not accept any other credit cards except citi VISA. This puts every other retailer at a disadvantage, which is why it's not fair, especially with small mom and pop retailers.

In case you don't know, VISA runs the ENTIRE debit network in the US, this new contract does not change anything re Visa cards, debit credit or whatever. One can use any debit card at Costco, that's always been the case.

Costco uses the same network all retailers do, and pays interchange rates plus, but in their case they have a special deal worked out with amex and now citi.

[Ruby the Liberal]

38. You didn't read the article

[jljamison]

53. correction...

no Visa does not run the entire debit network in the US

Visa has Interlink, which is a debit network that supports point-of-sale purchases with a PIN. MasterCard also has a debit network, called Maestro. There are others as well.

PIN based purchases in the US are subject to a maximum swipe fee as mandated by the Dodd Frank regulation bill passed in 2010. Swipe fees for Point of sale purchases are set at around 21 cents. The law also mandates that merchants provide at least two different debit networks and allow the customer to choose which network to process the transaction.

But swipe fees on credit and signature based purchases are not governed by law. They are divided between the bank that processes transactions on behalf of the merchant, and the issuing bank of the card. Swipe fees on credit cards vary by card type and brand - a Platinum or Gold card, for example, gets a higher swipe fee than a "regular" credit card. Merchants of course hate this.

So this announcement really has two separate but related components. First, Costco will no longer accept AMEX cards for credit purchases. Second, Costco will stop issuing Costco branded AMEX cards and start issuing Visa branded Costco cards, through Citibank (Visa is different from AMEX in that it does not issue cards directly; rather it licenses its brand to banks that then issue cards and extend credit)

Now Costco will accept any Visa credit or prepaid card But it is highly incented to get as many Costco customers as it can to choose to use a Costco Visa card, because then they have pricing pressure on both the issuing and merchant side of the transaction as far as swipe fees are concerned.

[Mosby]

54. This article says something different

Under the new agreement, transactions will be processed by Visa, and Citi will become the exclusive issuer of co-branded credit cards on April 1, 2016.

http://www.latimes.com/business/la-fi-costco-visa-20150302-story.html

That's what I have been saying, Costco is not going to accept VISA credit cards only Citis.

[jljamison]

55. ...acceptance is different than issuance

No - you are confusing acceptance and issuance.

Two things are true
1) Citibank will be the exclusive *issuer* of costco branded cards, and
2) Costco will *accept* all Visa cards.

To wit it says in this article down towards the bottom: "Costco will accept other Visa cards under the new agreement."

Visa and Mastercard don't give credit to anyone. Instead banks like Wells Fargo, Citi, Bank of America, etc., etc. all contract with Visa and Mastercard to "issue" cards to people. They issue plain cards, platinum cards, gold cards, prepaid cards, debit cards, etc. For credit cards, the banks extend the credit, send statements, collect payment, assess fees and interest, etc. That is what the term "issue" means.

Issuing banks cobrand cards all the time. Chase bank issues the United Airlines Mileage Plus cards. Citibank issues the American Airlines cards. Citibank has entered into another cobranding agreement, this time with Costco. It just so happens that Costo is also a merchant. Flip your V/MC card over or inspect the statement, and somewhere on there you'll see a name of a bank.

*Acceptance* is the term describing the merchant's side of the transaction. Merchants decide whether to accept card payments, and if so, which networks they accept. Most often merchants accept Visa and Mastercard. Some merchants accept V/MC and AMEX. It is not typical for merchants to accept only AMEX, as well as for merchants to only accept Visa and not MasterCard. Some merchants accept PIN (debit) and some don't.

[Blue_In_AK]

34. Alaska airlines VISA card.

Woo-HOO, more miles.

[Mosby]

37. The only credit card they will take is the citi VISA

Last thing they are going to do is pay your FF miles.

[tammywammy]

42. That's incorrect, they'll take any Visa

From the article:

Costco will accept other Visa cards under the new agreement.

[Mosby]

45. None of the articles I read on the topic are as clear about the differenrt cards as they should be

The first sentence of this article says: "Citigroup Inc. will become the exclusive issuer of Costco's credit cards and Visa Inc. will replace American Express as the credit-card network for Costco’s stores starting in 2016, the retailer announced Monday."

Maybe VISA is going to do their CC processing but if Costco starts accepting all VISA CCs, including ones with points, FF miles etc I would be shocked.

We will see I guess, I'll ask about it tomorrow when I'm at the business center.

[tammywammy]

49. The part I quoted is pretty clear

Costco will accept other Visa cards under the new agreement.

Even now (until April 2016) they accept all AMEX, not just the Costco AMEX.

[Blue_In_AK]

48. Wall Street journal says this:

The new deal means that consumers will be able to use any Visa-branded credit card when they make purchases at Costco stores. Previously, they were only able to use AmEx credit cards.

And

While any Visa card will be accepted at Costco under the new deal, the same can’t be said for Citi cards. Most of Citi’s vast card portfolio is processed through the MasterCard network, so many of Citi’s existing cards won’t be accepted at Costco.

[demigoddess]

39. it could be they changed for the customers

I got the Amex card through Costco and used it with no problem but some places will not accept Amex. Love using it for Costco gas and groceries, it makes for a much faster checkout.

[tammywammy]

43. Costco expects the current card holders to get new cards

From the article:

The retailer expects the existing portfolio to be sold, spokesman Bob Nelson said. When that happens, existing Costco members will have their new cards sent to them.

[freshwest]

50. That's what I was hoping for. Thanks for the info, didn't read the whole thing, just the replies.

[City Lights]

40. Cash only for us I guess.

I'm not getting a new credit card just to use at Costco.

[Jester Messiah]

52. Well that's irksome.

I wonder if Sam's Club takes AMEX.

[Orsino]

56. Ah. I've been mis-reading.

Thought it meant that Costco was going to stop taking my Amex at the register.