Costco's Move to Visa Cards Brings Problems

On Monday, Costco took the final step in severing its 17-year relationship with American Express and began exclusively accepting Visa for credit card purchases at its stores. For more than 11 million customers, the switch meant cutting up their Costco-branded American Express cards and swapping them for a new Visa card issued by Citigroup. A transition that executives promised would be seamless has turned into a customer service nightmare. Citigroup has logged more than 1.5 million customer service calls, and Costco’s social media pages are filled with thousands of scathing complaints.

Total Retail's Take: For Costco's executives to think this transition would be seamless was wildly optimistic — and most likely unrealistic. Not surprisingly, there have been a number of issues as the warehouse club transitions its millions of members to using Visa cards. Those problems include customers still waiting for new cards to arrive, problems with trying to activate or use their new cards, and issues with getting access to their accounts online. The result? Unhappy customers are venting their frustration, and Costco seems unprepared and not ready to pacify them. The good news for Costco is that as time goes on the transition will go smoother, but for right now it's a disaster.