When Costco announced that it would be moving on from American Express for its store card program, it was assumed that the resultant contract with Citigroup would come as a boon to the issuer. However, a few weeks and millions of customer complaints later, both new partners have a mess on their hands.
Bloomberg is reporting that Citigroup CEO Mike Corbat has publicly pledged on a conference call with reporters to devote “a lot of resources” in its attempt to smooth over the apparent kinks in its underlying support to Costco’s card program. As of last month, customers had been forced to wait up to 40 minutes on hold to speak to a Citigroup representative, and though further staffing decreased that to 10 minutes, Corbat still emphasized that Citigroup is committed to doing what it takes to make things right.
“We experienced extremely high calling volumes in the early implementation of it,” Corbat said. “Questions around card activation, questions around statements, questions around where to send payments, and so we’re working through that. We’re gaining on it. We’re very focused on it.”
Just because there may be some technical issues with the new Citi-backed Costco card doesn’t mean some shoppers aren’t making full use of the product. Citigroup CFO John Gerspach explained that in the card’s first three-and-a-half weeks of availability, consumers used it for a total of $5.7 billion in purchases. Similarly, the $10.6-billion loan portfolio acquired by Citigroup as part of the deal to replace American Express has increased to $11.3 billion at the close of the second quarter.
“It’s a much-improved value proposition for our members,” Richard Galanti, Costco’s CFO, told Bloomberg.
