For years, AmEx has been the chosen brand of Costco, both in the credit cards the company takes and carde it issues to credit-worthy customers. In a landmark move, that’s finally changed.
Costco recently announced it has come to agreement with Visa, jettisoning AmEx in favor of the more inclusive credit card brand. Now, all stores will only take Visa credit cards, and stores will only issue Visas.
This could be a big win for customers, both commercial and consumer classes. Sure, AmEx offered more prestige and exclusivity, but Visa brings with it better buying power and more cash back. According to recent releases, the new Costco Visa will offer customers four percent back on the first $7,000 in fuel and one percent on purchases after that.
Also, three percent back on restaurant and certain travel purchases versus two percent with AmEx.
Free money is great. More free money is even better, so it’s a cinch customers will appreciate the move. There’s no doubt the old AmEx was a winner. Customers consistently scored it high in reviews, so this isn’t an issue of making bad better. It’s a move to make good even greater.
The one possible downside, members will be able to get cash back at Costco or use their accumulated cash at Costco – a choice that obviously favors the store. But if customers are already spending money there, they likely won’t be bothered by this restriction.
From a public relations perspective it’s key that the company play up the increased cash back and keep the “yeah, but” of the exclusive cash back at a minimum in its communication. When asked about this, though, they can just point back at more money back for things being bought anyway. In other words, sure it’s spent at Costco, but it’s free money – more free money – and you were going to spend it anyway.
If Costco can stay on message, they should see little if any disgruntled customers as they make this switch. They may not want to lose the AmEx brand in their wallet, but that won’t matter if the Visa comes with more cash.
Ronn Torossian is the CEO of NYC based Public Relations Agency 5WPR.