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One of America’s top retailers, Costco, is making headlines due to its distinctive approach to business. The retailer does not operate like all the other retailers in the country. For example, when it comes to the payment method, the retailer focuses on cash and one credit partner. However, the retailer has now broken its own credit rule.
Details of Costco’s operation
As mentioned, Costco does not operate like other retailers, especially when it comes to the retailer’s payment method. The retailer limits itself to cash payments and to only one credit card partner. These options allow the retail giant to make the best deal possible when it comes to selecting a credit card company.
Therefore, Costco used to work only with American Express. However, the retailer now has an exclusive co-brand with Citi and Visa. The fact that the retailer partners with a sole provider, it has an opportunity to entice members to get that card.
In addition, Visa and Citigroup like and would choose that arrangement because it drives clients to them. Also, with this arrangement they get an opportunity to strengthen the deal by adding benefits such as, cash back and gas discounts. Although this partnership came under question and there was a lot of doubt concerning it, the two parties signed a three-year extension.
The Affirm partnership
Now Costco added a pay-over-time partner to its payment options. This offer will be offered of selected items at Costco’s online checkout. Affirm is a company that provides third-party buy now, pay later services. According to the retailer’s Chief Financial Officer (CFO) Gary Millerchip, the growth at the retailer has been extremely strong.
As the CFO spoke at the retailer’s third-quarter earnings call, he mentioned that the sales has been especially strong in the large and bulky items. The retailer also identified the fact that there are some consumers who really wish to structure their payments over a certain period. Specifically, when it comes to these large payments for the big products.
Millerchip feel that the partnership with Affirm benefits the consumers and retail members. Also, this association between the two parties is good for the retailer’s brand, because Affirm supports it. He also alluded to the fact that they believe that with this partnership, Costco will be able to deliver consumers with more value. This is done by having exclusive pricing options available which will provide consumers with more options in which they can choose to pay for a product.
The retailer’s Affirm deal
The retailer offers a buy now, pay later option called Flex Pay through Citibank. That service is limited to the retail giant’s Anywhere Visa Card members. When it comes to the deal Costco made with Affirm, more information can be seen below:
- BNPL Option: Members are allowed to split online purchases into monthly payments.
- Purchase Range: From $500–$17,500.
- Terms: It started at 3, until 36 months, APR 10% to 36%.
- No Hidden Fees: There is transparent pricing; with the important of no late fees.
- Credit Check: Members will receive an instant approval, and only soft inquiry will occur.
- Availability: Costco.com only (This will only be available for online purchases at Costco and not in warehouses).
- Multi-Year Partnership: This partnership aims at boosting digital sales and loyalty.
According to Money Talks News: “By offering more payment flexibility for items members may genuinely need — like appliance upgrades or seasonal purchases — Costco strikes that balance of supporting business growth while demonstrating understanding of the economic pressures many households currently face,”
In addition, it has been stated that analysts see this deal as a strong one for Affirm as well, and not just for Costco. According to J.P. Morgan analysts, Affirm is being described as a well-positioned company which is focused on continuous growth. Also, the Costco partnership is specifically highlighted as one of the central developments strengthening Affirm’s outlook.
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