New Costco deal with Citigroup seems to be getting costly as customers are not happy with the service
Costco Wholesale Corporation (NASDAQ:COST) customers have been put in rage by slow responses from Citigroup on their new credit cards been offered. According to Bloomberg reports, the customers have to face longer wait times and have trouble activating their new accounts.
Costco’s Facebook page was flooded with complaints regarding troubles users have to face in using their new Costco Anywhere Visa cards. The credit cards were supposedly available to be used from Monday. However, many customers are not happy with the service as millions of calls started coming in which Citigroup was not prepared for.
Costco replied on their Facebook page to calm customers down and an attempt to understand the problems they were facing with huge number of calls. They replied, “Due to high levels of interest in the Costco Anywhere Card and high volumes of calls from cardholders, callers to Citi should expect longer-than-desired hold times. Citi is reviewing processes and pulling in additional resources to alleviate hold times.”
Last year, Costco ended its 16-year long relationship with American Express as both the parties were not able to come up with a desirable card fees. Costco announced two months ago that Citigroup will become its exclusive card provider and Visa will replace its network with American Express. Recently, Costco sales declined and potentially the reason being the switch over of the credit card issues. That seemed like a temporary hit as analysts did expect it not to be too concerning for long-term prospects. However, the service end of the deal got caught up with millions of calls by customers of world’s largest whole sale club.
Citigroup spokesperson Jennifer Bombardier has apologized for the inconvenience to the customers. She also said that 11 million cards were issued by Citigroup and within two days they received 1.5 million calls. However, the call volumes are coming back to normal and customer needs are being met diligently. In addition, the online activation option is also available for customers which is a lot quicker for them and they don’t need to wait for a representative.
Analysts have been banking on Costco deal with Citigroup and Visa which could help the retailer cut costs. According to Morgan Stanley, Costco is charged $180 million a year on fees, while with Visa they can save up to $150 million in fee. A deal certainly beneficial for all three parties in the long term once the switchover is complete from the customer service end.