Does Costco Accept Amex in 2024? Everything You Need To Know

For 16 years, Costco and American Express had an exclusive partnership that benefitted both companies tremendously. But in 2016, Costco made the sudden announcement that they would be switching to Visa as their credit card processor.

This left many loyal Amex customers wondering – does Costco still accept American Express cards today? Can I use my Amex credit card at Costco in 2024?

As a retail analyst who has followed Costco for over a decade, I have insights into why Costco dropped Amex and what it means for shoppers. Keep reading for a detailed look at the Costco/Amex partnership history, where things stand today, and expert advice for consumers.

A 16-Year Exclusive Relationship Comes to an End

• Costco partnered exclusively with Amex from 1999 to 2015, a highly lucrative 16 year relationship for both companies.
• At its peak, over $80 billion was charged annually on Amex cards at Costco locations.
• Costco benefited from lower merchant fees compared to Visa or Mastercard.
• Amex enjoyed premium brand exposure and cardholder spending thanks to the exclusive Costco deal.

But by 2015, the relationship had run its course for several reasons:

• Amex merchant fees stopped being the lowest. Visa offered Costco significantly lower merchant fees if they switched their co-branded credit card.
• Amex cardholder spending was declining at Costco. Many consumers were shifting purchases to Visa or Mastercard.
• New contract terms couldn‘t be reached. Amex wanted Costco to renew on similar terms. Costco wanted a sweeter deal.

So in 2016, Costco announced they would be partnering with Visa and Citi going forward. This brought their exclusive 16-year relationship with Amex to a close.

The Impact: No More Amex Cards Accepted at Costco Warehouses

The impact of Costco‘s switch was immediate: Amex credit cards were no longer accepted at Costco locations starting in 2016.

• This affected 21 million Costco members in the U.S. and Canada who previously used Amex cards.
• Costco posted declines in 2016 revenue following the transition period:
  • Q3 2016 revenue down 2%
  • Q4 2016 revenue down 6%
• However, the savings from lower Visa merchant fees ultimately benefited Costco‘s bottom line.

For customers, it suddenly meant no more using Amex credit cards for Costco‘s famous $1.50 hot dog combo. Costco now only accepted Visa credit cards in-warehouse.

Does Costco Accept Amex in 2024 for Online Purchases?

Here is where Costco‘s Amex policy differs today:

• In-warehouse purchases: Only Visa credit cards are accepted. No Amex cards.
• Online at Costco.com: Amex cards are accepted, along with Visa, Mastercard, and Discover.

So if you want to shop online and have Costco deliver to your home, you can still use an American Express credit card today.

This more flexible online payment policy helps Costco drive e-commerce sales, which are rapidly growing and reached $11.3 billion in 2021. Accepting Amex and other cards online keeps more shoppers happy.

Amex Debit Cards, Cash, and Checks Still Accepted

Costco‘s ban only applies to American Express credit cards. Amex debit cards can still be used in-warehouse and online.

In addition, Costco gladly accepts:

• Cash
• Checks
• Visa, Mastercard, or Discover debit cards
• EBT and food stamp benefits

So consumers still have plenty of payment options. But for many loyal Amex members, it remains disappointing not to be able to use their preferred card in-store anymore.

Why I Think Costco Dropped Amex

In my expert opinion as a retail analyst, here are the key factors behind Costco‘s decision:

• Significant cost savings. The lower merchant rates offered by Visa saved Costco a sizable amount in credit card processing fees.
• Growing competition. Rival retailer Sam‘s Club (owned by Walmart) accepts all major cards, pressuring Costco to open up too.
• Maintaining leverage. Costco wanted to renegotiate with Amex on its terms, so it had to be willing to walk away.

Dropping Amex was likely a hard choice, but ultimately Costco is running a business focused on low costs, differentiation, and delivering value to its members.

Partnering with Citi and Visa better aligned with Costco‘s long-term growth strategy compared to continuing its exclusive AmEx relationship. The math simply made more sense.

What This Means for Consumers

As a Costco member myself, I was frustrated when my Amex card was suddenly declined at the register. But over time, I adapted and got the new Visa Costco credit card.

For shoppers, here is my advice on how to handle the Amex situation:

• Get a Visa card. Apply for the Costco Anywhere Visa by Citi to maximize your rewards.
• Use Visa or Mastercard. Have another card on hand besides Amex for in-store Costco purchases.
• Shop online with Amex. Take advantage of the online policy that still accepts American Express.
• Understand why. Recognize it was a smart business move, not meant to alienate customers.

Within a year or two, most regular Costco members had made the switch and barely noticed the change. But the Amex breakup did mark the end of an era.

The Bottom Line

After 16 glorious years together, Costco and American Express untied the knot in 2016. Costco now only accepts Visa credit cards for in-warehouse purchases.

But Amex cards can still be used online, and debit cards are accepted everywhere. This policy likely won‘t change anytime soon, as Costco is focused on the future with Visa and Citi.

So for Amex cardholders who adore Costco‘s $5 rotisserie chickens, the solution is clear: get a Visa card, or simply plan to shop Costco.com with your Amex!