Fedco Membership Stores, one of the nation's largest regional retail membership chains, has begun accepting Visa and MasterCards in all checkout lanes of its Southern California stores.
Fedco is thought to be the first major membership chain to begin accepting bank cards.
"Our objective is to expand into new markets where mostly cash and checks are taken," said Armen Khachadourian, vice president of merchant relations for Visa.
"Warehouse clubs are one of the last holdouts in the industry."
In the United States, the retail membership-club market posts sales of about $36 billion each year.
The two top national chains - Sam's Club and Price-Costco do not accept bank cards, but do take the Discover card.
Card Establishment Services, of Melville, N.Y., will prove payment-processing services to Fedco.
With $700 million in annual sales, Fedco operates 10 full-line stores, three furniture and appliance centers, and nine auto centers in Southern California.
About 20% of Fedco's four million members use the store's private-label credit card, noted Michael Gantes, senior vice president of merchandising for the retailer.
Fedco will be continue to accept those cards.
Also, Fedco is negotiating with Discover to determine if those cards will be accepted.
Fedco expanded payment options to include bank cards because members demanded it, Mr. Gantes said.
When tracking phone calls over a two-day period, Fedco noted more than 200 requests to take MasterCard and Visa.
Both associations will help Fedco promote bank card acceptance through separate promotions and advertising campaigns in November.
For the first two weeks of the month, Visa will offer $2 off a minimum $20 purchase using a Visa card. And for the three days after Thanksgiving, MasterCard will offer 5% at the register for customers who pay with MasterCard.
Mr. Khachadourian compares the membership store category to supermarkets.
Four years ago, only 800 groceries accepted bank cards, he said, and today more than 17,000 take MasterCard and Visa.
Supermarket acceptance began on a regional level and expanded nationally, Mr. Khachadourian said.
"It's an issue of finding a leader and working with that leader, then letting the competition respond to its actions."
