Why does Costco refuse credit card payments from non-Costco members in the United States?

Question

Alice and Bob were doing some shopping at Costco in the United States. Bob is Costco member, and Alice isn't not. The cashier, citing Costco's policy, refused to accept Alice's credit card: Alice was told that non-Costco members can only use cash and debit card. Only Costco members may use a credit card a means of payment.

Why would Costco refuse credit card payments from non-Costco members? I'm trying to understand if this is related to fraud protection, credit card fee reduction, or something else.

Answer 1

I suspect it's to discourage excessive use of somebody else's account as a guest. They want to sell more memberships instead of having one person let many people into the warehouse.

I lived in a college town with a Costco and they had a policy there that they'd take one payment and receipt per cart or member. Therefore, roommates or friends using guest privileges, which was very common, would have to reconcile the purchases and payment later.

Outside this college town, I haven't noticed them enforcing this policy, like when I ask them for a separate receipt for business purchases.

Amazon Prime did something similar when they changed the Prime guest policy to require sharing the same address and payment methods.

Answer 2

Potentially because credit card payments cost them money, and if you are a member, you basically pay those back through your annual fee. For non-members, there is not enough margin left to cover those additional cost.

Answer 3

Costco's whole business model relies on membership. Costco wants you to be a member so Costco makes things difficult for non-members.

Answer 4

I believe Costco only accepts Visa cards. They offer a Visa card with enhanced membership, and I strongly suspect that part of the deal, for bringing many thousands of new accounts to Visa, is that the usual merchant fees for people who use that card are greatly reduced or waived for Costco purchases.

Answer 5

There is no legal reason for them to deny the payment. As long as bob and Alex were together Costco shouldn’t stop this transaction. The same thing happened with myself and my brother and I confirmed with corporate be and escalated. As a matter of fact membership agreement states that every Costco member is allowed two visitors per visit. Stand up for your rights and don’t let cashiers and supervisors run the show. You signed on an agreement that protects you and respects you.