As a proud Costco member, I was disappointed to learn that I couldn’t use my Mastercard credit card during my regular shopping trips. Costco only accepts Visa credit cards in-store and at the pump. This restrictive policy has left many Mastercard holders like myself scratching our heads.
In this article, I’ll explain the reasons behind Costco’s Mastercard ban and provide some clever workarounds that still let you earn rewards and benefits when shopping at your favorite bulk retailer.
A Brief History of Costco’s Credit Card Drama
Before 2016, the Costco credit card shared its name with the American Express card. This exclusive partnership lasted for over 15 years. But when it was time to renew the deal, Costco wanted better terms.
Negotiations between the two companies broke down. As a result, Costco announced it would be switching to Visa as its new credit card partner.
The changeover officially happened on June 20, 2016. Ever since Visa has been the only credit card network accepted for in-store and gas station purchases.
Why Did Costco Ditch Mastercard?
Costco’s decision to adopt Visa exclusively had nothing to do with Mastercard specifically. It was a strategic move to reduce merchant fees.
Whenever someone pays with a credit card, the retailer has to pay a percentage to the card network. These interchange fees can really add up, especially for a high-volume merchant like Costco.
By agreeing to exclusive acceptance, Costco could leverage its purchasing power to negotiate extremely low rates with Visa. This saves them tens of millions per year.
Mastercard was left out in the cold during these very important talks, which was a shame. However, Costco only had to pick the partner whose terms were the best.
Payment Methods Accepted at Costco Warehouses
Although you can’t use Mastercard credit cards, Costco does accept various other payment forms:
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Visa Credit Cards: Any Visa-branded credit card is accepted, including the Costco Anywhere Visa by Citi.
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Debit Cards: PIN-based debit cards work at Costco no matter the network.
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Cash: Cash is always accepted if you want to pay the old-fashioned way.
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Checks: Personal checks are accepted for members. Business checks work for Business members.
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EBT Cards: You can use your electronic benefits transfer card at Costco.
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Costco Shop Cards: These prepaid gift cards can be loaded and used in-store.
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Mobile Payments: Apple Pay, Google Pay, Samsung Pay are all accepted.
If you don’t have a Visa credit card, you can still shop at Costco in a number of ways.
Clever Workarounds for Mastercard Holders
Let’s say you’re set on using your Mastercard at Costco. Here are two crafty solutions:
Purchase a Costco Cash Card
You can order these reloadable prepaid cards on Costco.com and have them shipped to your home. Just use your Mastercard to pay online.
When the Costco Cash Card comes, you can put up to $2,000 on it and use it like a gift card in the store. This lets you earn your Mastercard rewards indirectly.
Get a Visa Card Just for Costco
Apply for a secondary Visa credit card with no annual fee that you use exclusively at Costco. You can maintain your Mastercard for all other purchases.
The Costco Anywhere Visa is a great choice because it offers 4% cash back on gas, 3% on restaurants/travel, 2% on Costco, and 1% everywhere else.
Will Costco Ever Accept Mastercard Again?
Costco’s ban on Mastercard is unlikely to change anytime soon. The Visa agreement provides incredible value through reduced processing fees.
However, if Mastercard eventually makes Costco a better offer, they could become the exclusive network. But with Visa’s rock-bottom rates locked in for several more years, a switch seems highly improbable in the near future.
Mastercard Options for Canadian Costco Shoppers
Interestingly, the credit card policies are flipped in Canada. Costco locations only accept Mastercard north of the border after ending its Visa relationship in 2015.
So Canadians with a Mastercard are in luck. But U.S. customers will have to stick to Visa and alternative payment methods for now.
Final Thoughts
Costco’s decision to adopt Visa was driven purely by financials, not any preference for Visa over Mastercard. While inconvenient, Costco’s payment restrictions help keep its famously low prices affordable.
Luckily, Mastercard holders have some easy workarounds to earn rewards when shopping at Costco warehouses. And one day, if Mastercard makes the right offer, they may become Costco’s exclusive partner once again.
Solution:Â Create a digital Debit Card funded by your Mastercard Credit Card
Kasheesh is a payment service that offers a flexible solution for consumers looking to manage how they pay for purchases. One of its key features is the ability to generate a digital debit card, which can be funded by any card in your wallet, including your Mastercard credit cards. This allows you to use your Mastercard credit card when shopping at Costco by generating a Kasheesh digital debit card linked to your Mastercard credit card, and then using the Kasheesh card to complete your purchase.
How It Works [2024 Step-by-Step Guide]
- Sign Up and Link Your Cards: Begin by creating a Kasheesh account and linking your Mastercard credit card, along with any other credit, debit, or prepaid gift cards you want to use. â
- Create a Kasheesh Card: After linking your cards, you can generate a digital debit card within the Kasheesh platform. Choose your Mastercard credit card as a funding source, and Kasheesh will produce a virtual debit card that functions like any other card. â
- Shop at Costco: Use the generated virtual debit card for your Costco purchases, whether online or in-store, without worrying about Visa exclusivity. The purchase will be instantly charged to your Mastercard credit card via the Kasheesh platform.
Visa Costco Hack – How to Use Your Mastercard at Costco #travelhacking
FAQ
Why won’t Costco take my Mastercard?
There could be several reasons why your card is being denied at Costco: Insufficient Funds: If you’re using a debit card, ensure that you have enough balance in your account. Card Expiration: Check if your card has expired. An expired card will not be accepted.
Why did Costco stop using Mastercard?
Costco stores don’t take Mastercard credit cards because they have a deal with Visa that only lets them accept Visa. However, you can still use your Mastercard for purchases on Costco. com and via the Costco app.
Does Costco accept any Mastercard?
In Warehouses:
Mastercard (the only credit card they take) Any Canadian debit card. Cash. Costco Shop Cards.
Why doesn’t Costco accept Amex anymore?
However, this arrangement changed when Costco and American Express decided to part ways in 2016. Following this, Costco partnered with Citi as its exclusive credit card issuer, with Visa becoming the exclusive credit card network for Costco stores in the U. S. and Puerto Rico.