Costco stopped accepting Amex because American Express charges higher merchant processing fees than Visa, and Costco's business model relies on low costs to keep prices down for members. After a long partnership, Costco switched to an exclusive deal with Visa in 2016, negotiating lower processing rates in exchange for massive transaction volume, a strategy that benefits their low-margin business.
Costco wants to keep their transactional costs as low as possible. The only credit card they've accepted up to this point in the US was AMEX. VISA and MC likely have too high of a merchant cost for Costco, and thus, they don't accept them.
Before you head out to Costco, make sure there is a Visa in your wallet if you're going to use a credit card because your American Express card won't work there. Whether you decide to go with the Costco Anywhere Visa® Card by Citi or another Visa card depends on your situation and interests.
Most businesses will let you pay with Amex no problem at no extra cost to you. The possible exception is if you are a particularly heavy spender with Aldi or Costco. Not being able to use your Amex card at these retailers will impact your ability to earn rewards with an Amex card.
Starting in 1999, Costco entered into an exclusive partnership with American Express and only AmEx credit cards were accepted at the wholesale giant's stores. However, that relationship ended in 2016 and the retailer struck a deal with Citi to be its exclusive credit card issuer.
American Express' management made it too dependent on a few co-branded card partnerships. The benefits from this strategy were temporary and outweighed by the concentration risks. Some of these risks still exist today, even though Costco, Fidelity, and JetBlue are no longer partners.
That's because American Express charges merchants a higher fee than competitors do. All credit card networks charge processing fees for businesses to accept card payments from that network. But some fees are higher than others.
Costco switched to Visa mainly for business reasons. Though they enjoyed a 17-year exclusive relationship with American Express, eventually they could not negotiate a renewal of the contract with the terms they wanted.
In Australia, American Express (Amex) isn't accepted at major discount retailers like Aldi and Costco, some smaller independent businesses, and certain government service payments (like vehicle registration), mainly due to higher merchant fees, though acceptance at large retailers is widespread. You should always carry a backup Visa or Mastercard, as smaller cafes, restaurants, and local shops often decline Amex.
Since Costco has an exclusive contract with Visa, shoppers can't use credit cards backed by the other three main networks — American Express, Mastercard and Discover — at Costco warehouses. However, you can pay with Mastercard for purchases made at Costco.com and the Costco app.
This is likely because processing fees for Amex payments tend to be higher than for Visa or Mastercard, so many retailers don't accept it. To check whether it's accepted, simply look for the American Express symbol at the till or checkout page if shopping online.
No, Costco does not count as a grocery store for Amex. When you use an American Express credit card that includes “U.S. Supermarkets” as a bonus category, your purchases at Costco will not earn you any bonus rewards for that category.
Yes, you generally need a Costco membership to shop in their warehouses, as it's a membership-only warehouse club, but non-members can sometimes shop by using a member's Costco Shop Card or Instacart delivery, and non-members can also buy items online at Costco.com with a slight markup. While members can bring guests, only the cardholder can make purchases, though guests can sign up at the counter.
After only accepting American Express for the past 16 years, Costco will begin an exclusive credit partnership with Visa and will use Citigroup as its provider.
Not surprisingly, this was a major turn-off for business owners. American Express also developed a reputation for siding more frequently with the customer than with the business in chargebacks and other disputes. It was a combination of these factors that caused many merchants to decide not to accept it.
Here's why: Costco negotiated an exclusive partnership. They guarantee Visa massive transaction volume across 500+ stores. Visa gives them low processing rates in return. The math is simple: When you process billions in transactions, even a 0.1% rate reduction saves millions.
Some people think American Express is bad because it does not have the same widespread international acceptance as other major card networks, and merchants often take issue with Amex's high interchange fees.
100,000 American Express Membership Rewards points are generally worth $1,000 to $2,000 or more, depending on redemption; you get about 1 cent per point ($1,000 total) using the travel portal or gift cards, but can achieve 2 cents per point or higher ($2,000+) by transferring to airline/hotel partners for premium flights, yielding significantly more value, according to Bankrate and WalletHub and The Points Guy.
The Amex 2/90 rule is a guideline limiting most people to approval for no more than two new American Express credit cards within a 90-day period, even if they meet other rules like waiting five days between applications (the 1-in-5 rule). This rule specifically applies to credit cards, not necessarily charge cards, and is a key factor in managing how many new Amex cards you can open and get welcome bonuses for.
In fact, Amex was partnered with Costco until as recently as 2016. But due to the aforementioned high merchant fees, that partnership ended in favor of one with Visa. And Tremblay doesn't foresee the big-box retailer returning to Amex in the near or distant future.
The 2/3/4 Rule is an informal guideline, primarily used by Bank of America, that limits how many new credit cards you can be approved for: two in a two-month (or 30-day) period, three in a 12-month period, and four in a 24-month period, helping lenders manage risk from frequent applications and "churning" for bonuses. It's a rule for applicants, not a limit on how many cards you should have, but a strategy for managing applications to avoid automatic denials.
Costco Wholesale Corp. has formed a deal with Visa Inc. and Citigroup Inc. that would charge the retailer about zero for acceptance costs on credit-card payments, according to Bloomberg. Costco will still face small fees issued by other banks on Visa cards, but the new deal will offset them, according to Bloomberg.
The main cons of American Express (Amex) include limited merchant acceptance (due to higher fees for businesses), high annual fees on premium cards, and strict credit requirements, often needing good to excellent credit; plus, some traditional Amex cards are charge cards requiring full monthly payment, unlike typical credit cards, and points transfers can sometimes be slow, notes Investopedia, Finder.com.au, Credit Suite, Bankrate, Point Hacks, Half Past First Cast, and YouTube}.
Credit card currently accepted include Visa, MasterCard, and American Express. Debit card currently accepted include Visa Electron, Delta, and Maestro. Direct debit.
The American Express Centurion Card, colloquially known as the Black Card, is an exclusive invitation-only charge card issued by American Express. It is reserved for the company's wealthiest clients who meet certain net worth, credit quality, and spending requirements on its gateway card, the Platinum Card.