Does Costco accept credit cards?

Costco-visaCostco has a rather strange payment policy that often confuses people, and it’s no wonder, thanks to the fact that their policy is actually different in the stores versus online at Costco.com.

Costco only accepts Visa credit cards in its warehouse stores. No MasterCard. No American Express. No Discover. Costco even has its own credit card — the Costco Anywhere Visa. (We should note here that Costco used to accept American Express exclusively; in 2016 it switched that allegiance to Visa.)

It’s a different story online, though. Costco treats its Web site like it’s any other e-commerce site, meaning anyone can make purchases on Costco.com, even if you are not a Costco member. (Though non-members will pay a 5% surcharge on top of the price of anything they buy.) You can also use almost all credit cards, including not only Visa but also MasterCard and Discover. But not American Express! (Costco really stuck it to Amex when their previous deal ran out.)

So, why only Visa in Costco stores?

The short answer is: money. Visa gave Costco the best deal to process credit card transactions — in fact some reports have said that Visa does not charge Costco at all, a deal that its former partner American Express could or would not match.

Why would Visa provide its service for free? In the competitive card transaction market, it may have decided that getting the piece of business was worth it both for branding purposes and to keep any of its competitors from winning the business.

But why does Costco accept the other credit cards online? This one has us stumped. If you think you know, gimme a holler at adam@creditcardcatalog.com.