The Reason Costco Only Accepts Visa Credit Cards

, they can enjoy considerable savings on a variety of bulk food and household items. (And even caskets, if they’re so inclined.) But, there is one nagging frustration some visitors have: If you’re paying via a credit card, Costco only accepts Visa. That means Mastercard, American Express, and Discover users are out of luck. So what’s the reason?

Like most of Costco’s business decisions, it comes down to cutting expenses. Typically, merchants are charged a transaction fee of up to 3 percent by credit card issuers. While that may not sound like much when picking up a rotisserie chicken, it can ultimately add up to millions.

with Visa. In exchange for making Visa the only credit card accepted at the warehouse and at gas pumps, Visa fees amount to virtually zero.

cardholder pool (140 million worldwide) compared to Visa’s giant network (4.3 billion).

up to $180 million a year—Visa and Citigroup swooped in, making Visa the exclusive card and Citi the store’s co-branded card issuer.

“The numbers didn’t add up,” AmEx chief executive Kenneth Chenault said at the time. “We couldn’t accept their financial terms nor their contract terms, some of which would have meant taking on more risk than we were comfortable with.”

almost any debit card, even if it’s issued by Mastercard. They can also pay by cash, check, electronic benefit transfer (EBT), mobile payments like Apple Pay, or traveler’s checks.

a Costco-branded Mastercard—but only for shoppers in Canada.

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