Costco activates contactless terminals in stores

Two years after Citi launched more than 7 million contactless-enabled Costco credit cards in the U.S., Costco has finally enabled tap and pay at its U.S. stores.

The Costco Anywhere Visa card works for contactless payments inside most U.S. Costco stores now, ending a dilemma for cardholders who were frustrated by the dormant feature.

Costco’s U.S. gas pumps are designed accept contactless payments, but that feature is not yet live. The chip-card liability shift goes into effect for U.S. gasoline merchants in October 2020 and many are working to reconfigure their pumps.

Costco is also poised to accept Apple Pay, and the store is rumored to be testing a digital membership card. Costco was not available to comment.

Contactless cards are ubiquitous outside the U.S., with mass merchant adoption in Australia, the U.K. and across most European markets. Up to 20% of all transactions are contactless in most of these regions, according to a recent report from A.T. Kearney.

U.S. issuers were late to the contactless card movement because of a false early start a decade ago when terminals weren't ready. Afterwards, in the rush to meet the October 2015 EMV liability shift, most issuers skipped adding contactless technology because there was still no critical mass of NFC-ready terminals.

Citi was the first U.S. issuer to commit to a fully contactless credit card portfolio, embedding the latest generation of EMV contactless in all of the Costco cards. EMV contactless payments are accepted at a few major merchants, including McDonald’s and Walgreens. Most older contactless-enabled terminals, including vending machines, do not recognize EMV contactless cards.

Observers have said the U.S. market is now ripe for more banks to leap to contactless cards. Several major transit operators have announced plans to add contactless acceptance at turnstiles, but few issuers have made the move.