Why Costco Does not take MasterCard, American Express or Discover Credit Cards.

Curious about why Costco does not accept MasterCard, American Express and Discover credit cards? Let’s find out in this article. Ensure you keep reading not to miss out.

Why Do Costco Warehouses Only Accept Visa Credit Cards?

Costco, a favorite shopping spot for many, has a surprising rule – only Visa credit cards are welcome at their warehouse stores.

You might be wondering why they don’t accept MasterCard, American Express, or Discover.

The answer boils down to a little thing called money. It seems like a money-grabbing move, but in reality, it’s all tied to Costco’s mission of giving you the best deals possible.

At first glance, the reason is straightforward: cost savings.

When retail stores accept credit cards, they have to pay something called a “merchant processing fee” for each transaction.

This fee usually hovers between 1.5% and 4% of the total purchase amount. It gets divided between the bank that issued your credit card and the card network, which could be Visa, MasterCard, American Express, or Discover.

In addition, for smaller retailers, these fees can be a bit of a pain as they don’t have much bargaining power.

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But here’s where Costco comes in – being a giant retailer with a massive following, they wield considerable market influence.

So, when it is time to negotiate these processing rates, Costco can flex its muscles and lower the fees to a level that’s below the norm.

In the past, Costco exclusively accepted American Express due to the favorable deal they were getting on merchant fees.

However, when that contract expired, they put the next one up for grabs. This is where Visa comes in, offering them the sweetest deal on merchant fees. But there was a catch – Visa wanted to be the sole credit card accepted in Costco stores.

So, the reason behind not accepting MasterCard, American Express, or Discover boils down to this: Visa gave them a fantastic deal on merchant fees.

This is Costco’s way of ensuring they can keep offering you incredible bargains in their stores.

If they were to accept other credit cards, they might need to increase prices to cover the extra fees. However, it is important to note that we can’t say for certain, as Costco keeps the exact numbers under wraps.

Furthermore, while you can only use Visa cards in physical Costco stores, you can also use MasterCard and Discover on their Costco.com website.

But they don’t accept American Express online. Why the discrepancy? The truth is, nobody knows for sure.

One speculation is that the products available online might have higher-profit margins, which could offset the extra card fees.

But that’s just a guess, as Costco hasn’t provided a clear explanation for the difference in them in-store and online credit card policies.

Hence, when next time whip out your Visa card at Costco, and remember that it’s not just about convenience.

Behind the scenes, it’s a strategic move that helps keep their prices low, fulfilling their mission to give you the best deals around.

Credit Cards Accepted at Costco Warehouses

Any credit card supported by the Visa network may be used in-store at a Costco warehouse, including:

  • The OpenSky® Secured Visa® Credit Card
  • Wells Fargo Active Cash® Card
  • Credit One Bank® Platinum Visa® for Rebuilding Credit

Frequently Asked Questions

Why doesn’t Costco take Discover cards?

Where Can I Use My Discover Card but Can’t? The largest retailer that does not accept Discover cards is Costco, a wholesale club. In exchange for a lower merchant fee, Costco has an exclusive agreement with Visa to only accept Visa credit cards.

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Why is Costco refusing to accept my credit card?

Which credit cards do they not accept at Costco? At this time, only Visa cards are accepted at Costco Warehouses and gas stations. This implies that Costco members who shop in-store are unable to use any credit cards that aren’t Visa, such as American Express, MasterCard, or Discover.

Why do certain companies not accept Discover and American Express cards?

Although every credit card company levies a fee, not every fee is the same. Due to this configuration, businesses can decide which credit cards to accept. For a merchant, the various fees frequently make or break a deal. This is the reason why a lot of businesses, especially small ones, don’t take American Express.