In a significant policy shift aimed at curbing the misuse of membership cards, Costco Wholesale has announced that it will be installing membership scanners at the entrances of all its locations. The new system will require shoppers to scan the barcode on their physical membership card or use the QR code on their digital Costco ID before entering the warehouse. This move marks the end of an era for those who have been mooching off friends’ and family members’ Costco memberships.
The new policy is set to be implemented “in the coming months” across Canada, with some stores in Ontario, British Columbia, and Alberta already testing the technology. The change is part of Costco’s broader effort to ensure that only valid membership holders gain access to its warehouses, including the popular food court and the renowned $1.50 hot dog stand.
In addition to the scanners, Costco employees will be more vigilant in verifying the authenticity of membership cards. Plans to use a membership card without the owner’s photo have been thwarted, as employees are now instructed to ask for photo ID if the membership card does not feature a photograph. This added layer of security is designed to prevent unauthorized use of membership cards.
Should a member not have their photo on the card, they will be “encouraged” to visit the membership counter to have their photo taken and added to their account, ensuring that future visits are hassle-free.
Under the new policy, guests accompanying Costco members must also adhere to stricter rules. Guests will only be allowed entry if they are with a valid membership holder, and this rule will apply to all areas of the warehouse, including the food court. This marks a significant tightening of Costco’s previously more relaxed entry policy, which had allowed non-members to accompany members with minimal scrutiny.
The Motivation Behind the Move
Costco’s decision to enforce stricter membership checks follows an increase in the number of shared memberships since the onset of the COVID-19 pandemic. Richard Galanti, Costco’s Chief Financial Officer, explained in an interview with CBS that scanning memberships at the door will streamline the shopping experience by eliminating the need to check memberships at cash registers and self-checkouts.
“It speeds up the process at entry and speeds up the process at the checkout,” Galanti said, emphasizing the dual benefits of efficiency and security.
Costco’s 2023 Annual Report highlighted the significant revenue generated from membership fees, totaling an impressive US$4.6 billion (C$6.3 billion) from its 128 million cardholders. The new scanning system is expected to protect this revenue stream by ensuring that all shoppers are paying members.
To add to these changes, Costco is also increasing its annual membership fees next month. Individual, business, and business add-on memberships will see a $5 increase, bringing the annual cost to $65. Executive memberships will rise by $10 to $130, with a corresponding increase in the maximum annual rewards.
The last time Costco raised its membership fees was in June 2017, making the upcoming increase the first in over six years.
Costco’s crackdown on membership sharing mirrors recent actions by major streaming services like Netflix and Disney+. These companies have also introduced measures to limit password sharing, effectively locking out non-paying users in an effort to boost revenue. As more companies seek to enforce stricter access controls, consumers may find themselves needing to reassess how they manage and share their memberships and subscriptions.
Costco’s new membership verification process is a clear message to its customers: access to its exclusive benefits is reserved for paying members only. With the introduction of scanners at store entrances and a crackdown on unauthorized card use, the days of sharing a friend’s Costco membership are numbered. As the company continues to grow and evolve, these changes reflect a broader trend towards tighter controls and enhanced security across various industries.
