Why does costco only take american express

The relationship accounted for 8 percent of American Express billed business last year, 20 percent of its worldwide loans, and 10 percent of its cards in force. American Express said that Costco pays a significantly lower rate than the overall average it imposes on other retailers as part of the agreement.

That arrangement gave the credit card company exclusivity for almost two decades, though Costco also accepts debit cards and cash. Costco Wholesale Corp. The expiration of the American Express deal could clear the way for rivals Visa Inc. By switching its sole credit provider from American Express to Visa, Costco expanded its potential client network by millions. While American Express had That means that at least million more Americans can use their credit cards at Costco.

It also made shopping more flexible for current Costco members. Instead of being locked into using an American Express card, members can now take advantage of the variety of Visa cards available in the marketplace. It also has the benefit of being a Visa card, which is accepted at more merchants worldwide than American Express.

Reward points are only redeemable at Costco warehouse stores and on Costco. That deal dissolved in , with Visa taking the place of AmEx. But being the sole method of plastic payment at Costco meant Visa was willing to negotiate that fee down to a reported 0. Put simply, Costco wants you to use a Visa card because it saves them a considerable amount of money in transaction fees. Granted, using this method is a workaround shopping at Costco with an Amex card.

On the other hand, fresh produce such as meat won't be available for delivery, so this option may not be best for Costco's most die-hard loyalists. Full ratings data available on Benzinga Pro. Please email feedback benzinga. Benzinga does not provide investment advice. All rights reserved. Thank you for subscribing!