Costco’s stores to soon have EMV readers for its cobrand cards

Any Costco credit card customers befuddled by the fact that they’ve got a state-of-the-art contactless-enabled EMV card in their wallet — and yet Costco itself doesn't accept EMV in stores — may soon see that disconnect end.

Costco Wholesale Corp. is getting ready to flip the switch on EMV card acceptance at its U.S. stores, finally aligning the checkout experience with the chip-enabled Costco Anywhere Visa card, which rolled out midway through last year.

Many Costco stores currently display a placard on their payment terminals saying “Chip Coming Early 2017,” with a Visa logo, though store officials were not available to provide details. Costco has nearly 500 U.S. stores and approximately 200 more outside the U.S. in markets where EMV has long been the payment industry standard.

Ron Antonelli/Bloomberg

Costco’s delay in introducing EMV isn’t surprising, given the challenges faced by many national retailers—especially grocery chains, analysts say. What makes Costco’s case more interesting is the fact that its cobranded Visa card, issued by Citi in a highly publicized switch from longtime former issuer American Express Co., not only sports a chip, but also contactless payments, which is less common among major U.S. issuers.

Citi, which says it’s experiencing strong growth since launching the card last year—picking up more than 1 million new cardholders in the bargain—clearly hopes that by using NFC, it may drive more payments volume among consumers, according to industry observers.

Costco is one of many retailers lagging on supporting EMV at its stores following the counterfeit card fraud liability shift that went into effect in October 2015. In Costco’s case, there may have been less of a fraud concern because it is a membership-based company where shoppers are required to show credentials each time they enter the store.