Gyroscopic Investing

Costco Wholesale Corp. has attained a goal that retailers have sought for years: near-zero expenses for credit-card payments.
In a deal with Visa Inc. and Citigroup Inc., Costco’s acceptance costs will be about zero, according to people familiar with the arrangement. That compares with the roughly 0.6 percent of each transaction the retailer pays its current partner, American Express Co. While Costco will still incur small fees on Visa cards issued by other banks, incentives from Citigroup and Visa will offset them, the people said.

MangoMan wrote:

dualstow wrote: Google says many retailers pay 1/3 to 1/2 more to American Express than to Visa.

That is also true. We only accept V,MC,Discover at 2%. If we want to add Amex, the fee for Amex would be around 3% as of my last quote IIRC.

photo caption wrote:Costco Wholesale Corp., the retailer that replaced American Express Co. as its credit-card issuer in Canada, is considering a similar move with its larger U.S. portfolio.

MangoMan wrote: It's just not that straight forward. Amex doesn't get the whole 1% you refer to; it is shared with the merchant's processing bank and maybe other intermediaries. Also, Amex makes money on interest, fees, co-branded offers and other avenues.

madbean wrote: I wouldn't be surprised to get a notice in the mail that things are going to be changing

Xan wrote: Sometimes (often?) the cashback that you get varies.  It may be you get no cashback at Costco.

madbean wrote:

MangoMan wrote: It's just not that straight forward. Amex doesn't get the whole 1% you refer to; it is shared with the merchant's processing bank and maybe other intermediaries. Also, Amex makes money on interest, fees, co-branded offers and other avenues.

They've never gotten a penny in interest or fees from me so I have to believe that at .6% my 2% cashback account is an overall losing proposition. I wouldn't be surprised to get a notice in the mail that things are going to be changing if this keeps up.

WiseOne wrote: I've been looking into Instacart, and in my area you can use it to order from Costco without the need for a Costco membership (!).  And the $3.99 delivery fee is a much better deal than the $12 car service or the $18 parking. 

Not only that, but I can pay for the Instacart order online with my Blue Cash Amex card.  From what I've read, Instacart purchases come up as grocery.  This should let me get the 6% cash back on the entire order, including anything from Costco.

This whole thing seems almost too good to be true.  I can't wait to try it out.

madbean wrote:

WiseOne wrote: I've been looking into Instacart, and in my area you can use it to order from Costco without the need for a Costco membership (!).  And the $3.99 delivery fee is a much better deal than the $12 car service or the $18 parking. 

Not only that, but I can pay for the Instacart order online with my Blue Cash Amex card.  From what I've read, Instacart purchases come up as grocery.  This should let me get the 6% cash back on the entire order, including anything from Costco.

This whole thing seems almost too good to be true.  I can't wait to try it out.

Sounds like a great service for someone living car-less in a place like NYC. Always wondered what that would be like without being able to drive to the grocery store and come home with bags full of groceries.

(madbean) Always wondered what that would be like without being able to drive to the grocery store and come home with bags full of groceries.

WiseOne wrote:

madbean wrote:

WiseOne wrote: I've been looking into Instacart, and in my area you can use it to order from Costco without the need for a Costco membership (!).  And the $3.99 delivery fee is a much better deal than the $12 car service or the $18 parking. 

Not only that, but I can pay for the Instacart order online with my Blue Cash Amex card.  From what I've read, Instacart purchases come up as grocery.  This should let me get the 6% cash back on the entire order, including anything from Costco.

This whole thing seems almost too good to be true.  I can't wait to try it out.

Sounds like a great service for someone living car-less in a place like NYC. Always wondered what that would be like without being able to drive to the grocery store and come home with bags full of groceries.

We have ways to deal with it.  We don't shop like you do in the suburbs - typically you buy what you need only when you need it, and you have relatively small fridges and kitchens so you don't store a lot of stuff.  I did manage to find space for bulk purchases, but you have to be choosy about what you buy in large quantities.  Also it helps to have one of those "granny carts".

Companies like Instacart and Fresh Direct are a godsend for people in the suburbs, too.  I introduced my mother to Fresh Direct and she's thrilled.  She's almost 80 years old and spends her days taking care of my severely disabled father, and going to the grocery is an increasingly difficult chore.  Having delivery services available is going to make a big difference in how long she will be able to remain at home in an otherwise car-dependent suburb.  My mother is fiercely independent and she will never voluntarily leave her home for assisted living, and I can't say that I blame her.  Frankly this is one reason why New York City is not at all a bad place to call home; between full service elevator buildings and the ubiquitous delivery services, you can consider Manhattan to be one huge assisted living center.