Costco’s credit-card swap had customers threatening to cancel their memberships. Now Citi says the transitional struggles are coming to a close.
On Friday, Citi executives addressed the problems Costco members faced in June when the firm became the exclusive issuer of Costco co-branded credit cards, with the budget retailer switching from American Express to Visa as its card of choice.
With 11 million Costco members making the switch, Citi had a huge customer base to help transition — and, apparently, not enough customer-service representatives.
“We’re working through that,” CEO Michael Corbat said in a call with analysts, after reporting second-quarter earnings. “We’re gaining on it. We’re very focused on it. We’ve got a lot of resources deployed against it, and it’s something we can fix in the short order.”
According to Corbat, Citi faced “extremely high calling volumes” from customers with questions about card activation, statements, and payments.
“It’s got to be one of the largest portfolio-implementation transfers on a single day that’s ever been attempted,” said Citi CFO John Gerspach. “That’s not to give us excuses … But again, it’s a massive program.”
Citi’s inability to respond to customer questions was one of the biggest problems in the Costco credit-card transition in late June, with members facing long wait times and dropped calls while waiting to speak with Citi customer-service representatives.
“Worst credit card transition ever — 4 hours and counting on the phone with Citibank and they still can’t get my cards to me,” one Costco member wrote on Facebook. “Saving money isn’t worth alienating your members … seriously rethinking my patronage.”
Other issues included customers not receiving the new Citi Visa card in the mail, not being able to use corporate American Express cards, charges being flagged as “fraud,” and the transfer of rewards dollars being lower than expected.
Now Citi says wait times are decreasing. With customers more easily able to talk with representatives, other problems are being addressed and resolved.
Despite the complaints, the company says the swap has been an overall success.
Citi reported more than 337,000 new account acquisitions to date since the switch — a number that significantly exceeded Citi’s expectations. Purchase sales on Costco Visa co-branded cards totaled $5.7 billion in the three and a half weeks following the transition.
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