Costco's Secret Payment Deal: Why Only Visa is Accepted

Costco's payment policy is one of its quirks that shoppers are used to. The warehouse club only accepts Visa credit cards for in-store payments, a rule it has had since switching from American Express in 2016. The company signed a 10-year agreement with Citi in 2015 to issue co-branded credit cards on the Visa network.

Costco's exclusive deal with Visa allows it to negotiate lower swipe fees than other retailers. This helps the company keep prices low, which attracts more customers and grows its membership base. 'Costco is trying to lower the cost they charge at the register by lowering the interchange fees they pay by signing an exclusive relationship,' says Aaron Klein, a senior fellow at the Brookings Institution.

The arrangement doesn't require shoppers to have a Costco credit card or even a Citibank credit card. Any Visa will do. This has led some customers to seek out Visa credit cards specifically for shopping at Costco.