Costco Will Start Scanning Membership Cards at Its Entrance

Have you been using a friend’s Costco membership card to get two-liter jugs of olive oil, pallets of toilet paper, or rotisserie chickens for affordable prices? Unfortunately, your days of membership fee-free bulk grocery shopping may be over, following Costco’s recent announcement that customers will be required to scan their physical or digital membership card at the entrance of the store.

Members who don’t have a photo on their card will also need to show a valid ID upon entering. Both of these steps to crack down on consumers sharing membership cards are unsurprising, considering that the Washington-based big box store makes the larger share of its profits from membership fees.

If you’re familiar with Costco, then you undoubtedly know about its low prices. Purchasing a large number of groceries or household goods at a great value is what makes the chain so helpful to households across the country, but it doesn’t translate to massive profit margins for the brand.

The company’s revenue primarily relies on its annual membership fees. As of November 2023, Costco had 127.9 million paid cardholders that year, which yielded a large proportion of its profits. Out of the company’s $6.29 billion profit earnings in 2023, roughly 73% of that was from membership fees. This profit structure is what allows Costco to keep its prices so low, and undercut costs at other major retailers.

The shift to checking membership cards at store entrances — as opposed to the previous method, where membership was verified at checkout — is not the store’s first move to more strictly monitor membership sharing. Last summer, the brand began reviewing customers’ membership cards at self-checkout, and this April it started enforcing membership requirements for anyone eating at the food court.

Costco has never allowed membership sharing, and these changes are simply an effort to ensure that customers comply with the store’s policies. Nevertheless, they’ve prompted some backlash from customers. After both the recent announcement and a trial period to test scanning cards at entry earlier this year, customers have expressed that they think the precautions are either futile or unnecessary, with one Reddit user lamenting the need to “Scan when you walk in, check card again at checkout, [have] cashiers at every “self-checkout register…”

In spite of the complaints, the new strategy aims to ultimately improve the consumer experience. Checkout lines will move more quickly since employees no longer have to review membership cards, and customers won’t be able to load up a shopping cart only to learn at the front of the checkout line that they can’t complete the purchase without membership. And if you want to bring a friend with you, don’t worry. Costco’s guest policy will remain the same, with the brand only reiterating in their recent statement that all guests must be accompanied by a Costco member.

News of the big box retailer’s plans to scan membership cards upon entry follows an announcement earlier this summer that for the first time in seven years, Costco will be raising its membership fees. Starting on September 4, 2024 the price of a Gold Star membership will increase from $60 annually to $65, and Executive membership from $120 to $130. While this series of updates may feel frustrating for current and prospective members alike, they’re also likely to help ensure that Costco’s prices can remain so low.