A Big Milestone for Costco’s Co-Branded Credit Card
It’s the one million user milestone, in point of fact, and that’s big news for the wholesale retail outlet chain.
Further report came from a company earnings call led by Costco CFO Richard Galanti, who noted that most consumers actually had the card in hand, and several metrics were doing quite well, including new sign-ups, usage rates, and conversion rates.
Since Costco stopped taking American Express at all its United States and Puerto Rico stores starting back in June, in favor of the new partnership with Visa—the stores also all take Visa cards—it’s meant a big new opportunity.
Originally, Costco had a similar co-branding arrangement with American Express, and almost two thirds of cardholders have converted to the Visa equivalent. Plus, there have been plenty of account activations; 85 percent of those who transfer over have activated the account.
Customers were promised some fairly impressive rewards, like a better cash-back program and no annual fee, which partially prompted the switch.
This implies plenty of usage and plenty of activity, which is good news not only for Costco but for Visa as well. Payment cards with big user bases are not only spending plenty in the store itself, but there’s likely a little bit of action going on in payment processing charges as well, whether it’s a direct payment or just a cost savings.
Still, with Costco co-branded cards going so clearly like hotcakes, it’s a good sign overall and the kind of thing that suggests future shopping to come. Though the initial switchover wasn’t exactly a smooth project—there were plenty of customer complains about activating those new cards, among other points—the end result is fairly well clear: customers made the moves, made them successfully, and seem pretty happy with the results.
Just how good of news this will be for Costco and Visa remains to be seen, but for now, it seems like any initial problems may have been short lived.