AMEX Costco Divorce Impact: Declines rocket 25% in July

With the worst of declines over, expect “dead” cards to impact churn and revenue moving forward.

As Subscription Insider reported, the Costco and American Express (AmEx) “divorce” became official on Monday, June 20th. It has now several months since all Costco branded American Express cards transferred to Citibank’s Visa portfolio.

Many recurring merchants have been proactive reaching out to customers to mitigate the impact of the AMEX Costco shift since American Express cards operate separately from the Visa/MasterCard Account Updater network.

The Paul Larsen Consulting Group (PLC) reviewed their latest data on the impact of this “divorce” on recurring merchants. In July, we shared there was an 18% increase in card declines from May to June. That data combines the monthly and annual billers. The cutoff for the “divorce split” was June 20^th, so merchants had the ability to capture most of their transactions that month even with the 18% increase in declines.

July is where we see, and expected to see, the biggest hit with a whopping 25% increase in the payment decline rate.

Source: The Paul Larsen Consulting Group

As you can see in this chart, declines hit their highest rates post “divorce” during July. In August, approval rates for AMEX are ticking back up – but this isn’t necessarily good news.

By August, most of the monthly billers would have already attempted an authorization and any retry/recycle strategy would be exhausted. These accounts typically fall into a “dead account” status and billing is no longer attempted. So now expect approval rates will begin to increase while total AMEX successful sales will be down.

Filed in Auto-renew Subscription, Business Services, Consumer Services, Invoiced Subscription, News, Payment Processing, Research, Subscriber Only, Subscriber Retention

Melanie Stout

As a Partner at PLC, LLC, leading experts in "card-not-present" recurring payments and Pulse Payments Analytics, Melanie Stout brings her recurring payments expertise to optimize payments outcomes for hundreds of subscription merchants.

This expertise has been honed through decades of leading the Product and Marketing teams at subscription businesses across multiple verticals, including SaaS and direct to consumer companies.

PLC, LLC exists to maximize the lifetime value of subscriptions by helping to crush credit card-caused churn. The company's mission is to serve the community of subscription merchants by optimizing their bottom-line credit card processing results through the application of the recurring industry's best practices in the most effective ways. PLC delivers fine-tuned tools and weapons to more than 400 subscription merchants, including, Angie's List, Audible, Conde Nast, Disney, Dollar Shave Club, and Ipsy.