Retail

Costco’s Credit Switch Debacle

Well, you know what they say about the best laid plans of mice and men.

Despite careful and months-long preparation to migrate Costco’s branded cards to Citibank Visa from American Express, things have gone less than wholly smoothly. And now Costco has an increasing legion of irritated customers wondering when exactly their cards are going to be working right.

The main issue at hand seems to be distribution, and right now most fingers are pointing at Citi as the problem. Members, said simply, don’t have their cards yet because it looks like the issuer got on the distribution train a little late, leaving them without a store card since Monday when the Amex cards of old were officially switched off.

And so the outrage has begun, on social media in particular.

It is exactly the wrong time for such an uprising. Costco just failed to report same-store sales growth for the first time in six years, with falling fuel price and chilly spring weather taking the blame. Memberships, thankfully, are still on the rise, and consumer satisfaction remains high.

But the hiccup in card distribution is impinging on that good will, and it could be the start of some building animosity. UBS analyst Michael Lasser last month said he anticipates that Costco would likely raise its annual membership fee next year, with regular membership set to go up to $60, and executive level membership forecasted to hike to $120.

It also isn’t overwhelmingly helpful that Visa currently offers other cards with better deals than the new Costco card.

“I’m thinking that in spite of having many months to work out the distribution of new cards, Citi has committed a ‘fail,'” a Costco member who hadn’t yet received a replacement card told Business Insider in an email, calling the situation a “debacle” and adding “Costco may live to regret cutting off Amex.”

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