Costco Tests New Entry System to Crack Down on Card Sharing

The days of passing the membership card around might be over.
Updated July 18, 2024
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If you've ever enjoyed the perks of shopping at Costco without holding a valid membership card, your days of slipping through the cracks might be numbered. 

Costco, the retail giant known for its bulk bargains, is tightening its grip on membership policies. As the world grapples with the impacts of a global pandemic, Costco has observed an uptick in membership sharing, prompting the company to introduce new measures to ensure that only legitimate cardholders enjoy the benefits.

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Costco’s new system to check membership cards

The latest move involves testing a new system requiring members to scan their cards at the store entrance, a significant shift from the traditional flash-and-enter approach.

While members are allowed to give a second household card to someone in their home, the company has observed instances of non-members exploiting this rule. This issue has become more pronounced with the rise of self-checkout options, providing an opportunity for non-members to access benefits and pricing reserved for paying members.

Costco is cracking down on self-checkouts too

To counter this, Costco recently implemented a policy requiring shoppers to present their membership cards along with a photo ID at self-checkout registers, aligning them with the rules applied at regular checkout lanes. This was a clear signal that the company is serious about preserving the exclusivity of its membership benefits.

Why Costco is testing this

The initiation of a new system requiring members to scan their cards at the store entrance is a direct response to the challenges posed by membership sharing. According to Costco finance chief Richard Galanti, the company has observed an increase in membership sharing since the onset of the pandemic in 2020. This trend has prompted Costco to explore innovative solutions that not only address the issue but also enhance operational efficiency.

The new scanners, currently being tested in select stores, aim to streamline the entry process while minimizing the need for employees to manually check membership cards at cash registers and self-checkout counters. Costco believes that this approach will contribute to a more seamless shopping experience for members.

How to prepare for this new system

As Costco ventures into testing the new membership card scanners, shoppers need to be aware of the changing dynamics. While the exact details of the scanning process are yet to be fully disclosed, it's important for members to have their physical membership cards ready for scanning.

Costco is known for its commitment to member satisfaction, and the testing phase provides an opportunity for both the company and its members to adapt to the changes. You might not be able to pass your card around, but the new rules might make the shopping process more streamlined in the end.

Bottom line

With approximately 66 million paid members and 119 million cardholders in 2022, Costco holds a prominent position among global membership clubs. The annual fees paid by members contribute significantly to the company's profits, allowing it to keep prices competitive. Any compromises in membership growth or renewal rates could impact Costco's financial health and potentially lead to price adjustments. 

As the testing of the new membership card scanners unfolds, the bottom line is clear – Costco is prioritizing the protection of its membership model and the value it provides to its paying customers. 

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Author Details

Georgina Tzanetos Georgina Tzanetos is a former financial advisor who has been active in financial media for the past six years. She holds a master's in political economy from NYU, where she studied distressed labor markets.