Costco on Monday switched over from only accepting American Express credit cards to only accepting Visa credit cards in all its U.S. locations.
For years, AmEx had been the Issaquah-based retail giant's credit-card network and the issuer of its co-branded credit cards.
But last year Costco struck a deal with Visa to replace AmEx as its credit-card network, and for Citigroup to become the exclusive issuer of its co-branded credit cards. (The co-branded cards also act as Costco membership cards and come with a rewards program.)
That switch-over, originally slated for April, was delayed until this month.
As of Monday, the AmEx Costco Co-brand Card no longer works -- at Costco or anywhere else.
Members who had a Costco card from AmEx should have received a Costco Anywhere Visa Card by now.
The balances on AmEx Costo cardholders' accounts have been transferred to the new Citibank card accounts, according to information for customers from American Express.
The Costco Anywhere Card includes rewards of 4 percent cash back on eligible gas worldwide, including gas at Costco, for the first $7,000 per year, then 1 percent thereafter, according to information for customers from Citigroup.
Cardholders also receive 3 percent cash back on restaurant and eligible travel purchases, 2 percent cash back on all other purchases from Costco and Costco.com and 1 percent cash back on all other purchases.
Previous cashback rewards earned by members on their American Express cards should have been transferred automatically Monday to the new Visa card, according to Citigroup.
During the transition between the two card issuers, sign-ups for new co-branded Costco credit cards had temporarily been halted, resulting in a hit to Costco of about $18 million pretax in the second quarter, the company said earlier. The transition is also expected to affect third- and fourth-quarter earnings.
But Costco is reportedly getting a sweeter deal in its partnership with Citigroup, paying near-zero expenses on purchases made with the Costco Anywhere Card, versus paying 0.6 percent of each transaction in its deal with AmEx, according to Bloomberg.
For Visa cards issued by other companies, Costco will still incur small fees but the incentives from Citigroup and Visa offset them, the Bloomberg report says.