Transition to new Visa branded card has been anything but smooth for the retailer.
Costco announced last year that it planned to end its sixteen-year relationship with American Express in favor of a new agreement with Citi to offer a new store-branded Visa Card. The new “Costco Anywhere Visa Card by Citi” doubles as a membership card for Costco shoppers and will have an even better cash-back program in order to enticed more customer visits and increase memberships, according to CNN. Despite months of preparation for the transition from American Express to Citi Visa, however, Costco is now facing heat from members who say they have yet to receive their new cards or are unable to activate them, leaving them without access to their cards since the switch became official on June 20.
Although Costco promised that the changeover “should be seamless,” according to The Street, because members did not have to apply for a new account and they would be sent new cards in the mail, the reality has not been so smooth.
"The switch over from American Express to Citi Visa at Costco must be a huge mess," longtime Costco member Glenn Ginsburg wrote in an email to Business Insider. "Can't get to speak with a representative regarding my business credit card - have either been hung up on due to large call volume or waiting for 53 minutes to be transferred to another representative."
And while the glitches appear to be on the part of Citi for not distributing the new cards in a timely manner and delivering poor customer service as Costco members call in for more information, Costco is bearing the brunt of customer outrage and feeling the resultant public relations sting.
Although Costco failed to report quarterly U.S. same-store sales growth for the first time in six years in the most recent quarter, sales of memberships are still growing, according to Retail Dive, and the retailer also still leads in customer satisfaction. The card switch fiasco is threatening to tarnish those successes, however, leaving the retailer’s members hopping mad.
One Costco members who had yet to receive a replacement card told Business Insider that "I'm thinking that in spite of having many months to work out the distribution of new cards, Citi has committed a 'fail,'” adding "Costco may live to regret cutting off AmEx.”