It has been just over a month since all Costco branded American Express cards transferred to Citibank’s Visa portfolio. The Costco cards accounted for about ten percent of all AMEX cards in the world, with most of those residing in the U.S. The impact of the AMEX Costco shift can already be felt by many.
In the past, we have seen major portfolio shifts – USAA, the ninth largest issuer in the U.S., recently switched from MasterCard to Visa, e.g. The AMEX Costco shift, however, is different. Since American Express cards operate separately from the Visa/MasterCard network, they don’t participate in the same Account Updater pool, usually relied upon by recurring merchants to help get new card information and retain their subscription customers.
PLC reviewed the impact to our clients, and it wasn’t pretty. The AMEX Costco cards became invalid on June 20th. In looking at the data, we can see that the declines in the last ten days of the month brought down the overall AMEX approval rates to the lowest in at least 18 months, averaging about 18% lower than previous approval rates:
As we evaluate July data, we are seeing continued decreases in approval rates, with many of our merchants having July include their first renewal event since the portfolio change, rather than June.
This is one case where the only means of retaining these customers is by old-fashioned customer contact. American Express did not identify a specified set of prefixes affected, nor did Costco allow these to participate in Account Updater, leaving merchants scrambling to reach out to their customers and request alternate methods of payment – much like recurring businesses had to do decades ago! It’s a good reminder of how valuable the tools now available are for anyone operating a continuity business.